POSTAL GIRO SERVICE

HC Deb 21 July 1965 vol 716 cc1589-643

4.9 p.m.

Mr. H. Hynd (Accrington)

I beg to move, That this House would welcome the establishment of a postal giro service in the United Kingdom offering similar facilities to those given by postal giro systems in other countries. I should like to begin by mentioning one or two facts which, I think, are not controversial. The first is that this giro system was first introduced about 80 years ago in Austria and that now at least 44 countries, including nearly every West European country, Japan, some other Asian countries, and the former French and Belgian colonies, are enjoying this system, while in this country we have not yet agreed to take it up.

Briefly, it gives cost-free banking and credit transfer services while supplying the Exchequer with loans at either no or very low rates of interest, according to the arrangements which are made between the Post Office and the Exchequer, similar to what is done now by the Post Office Savings Bank. In that way the bank can recoup its costs and, we hope, pay its way.

This is not the time or place for me to give a technical lecture on the system, even if I were qualified to do so, but, for the record, I might mention one or two points. As the system is used abroad, anyone can open a giro account by simply paying in a deposit at any post office. The account holder gets from the Post Office free of charge a supply of cheque forms over-printed with his name and address and his account number. He gets a supply of postage-free envelopes addressed to the giro clearing house. With those two documents he can in a very simple way pay accounts, either to those who also have giro account numbers or to people who have not.

If the person to whom he is paying the account has a number, he just has to enter that number on a form and hand it into a post office, or drop it into the nearest letter box and post it postage-free, thus saving the cost of postage, of the postal order poundage, cheque charges and bank charges. If the person to whom he is paying the account does not have a giro account number, he can still send him a postal cheque, which can be cashed at any post office, probably at a small fee. The account holder can cash one of his own postal cheques at any post office on two or three days' notice.

Furthermore—and this is very important—wages may be paid by this system, by postal cheques which can be cashed at any post office in the country. Incidentally, they can be cashed or the amount or part of the amount can be transferred to the employee's Post Office savings account or to his giro account, thus being an incentive to saving. There are many refinements, and ancillary services can be attached to this simple transfer credit system, and, in fact, are attached to it in various countries; but I do not want to go into them at the moment.

The point which I want to stress is that this is a simple system of credit transfer which can be operated through our network of 23,000 post offices throughout the country, many of them in remote parts where there is no bank, all of them open at hours when banks are closed, and, therefore, providing a very convenient service to the public which they do not have at present. Furthermore, I want to underline the fact that as used on the Continent this system has international recognition and that postal cheques issued in one country can be cashed in another country. All these giro clearing houses are linked together by Telex machine.

This question has frequently been raised in the House over the last 50 years. When it was first raised, Sir Herbert Samuel was Postmaster-General, and he rejected the idea. But it has been brought up from time to time since then. In 1928, the Post Office Advisory Council recommended that this or a system like this should be adopted for depositors in the Post Office Savings Bank, and in 1931 the Post Office introduced a system whereby withdrawals from the Savings Bank could be used to pay third parties by way of draft warrants. This is one step in the direction which I am advocating but only a very small step.

In 1959, the Royal Commission on the Working of the Monetary System, the Radcliffe Commission, recommended that the giro system should be investigated if the commercial banks in this country did not introduce a simple transfer credit system. The banks took the hint and in 1961 they introduced a transfer credit system. As I am dealing with facts at the moment, I will express no opinion as to the effectiveness of that system.

On 4th March, 1963, well within the recollection of many of us, our late lamented friend Mr. W. R. Williams, on an Adjournment Motion, raised the matter again and received a very discouraging reply from the then Assistant Postmaster-General, whom I am glad to see with us today, His two main objections were, first, that he was not satisfied that the Post Office would obtain a profit from operating the giro system, and, secondly, that we ought to wait and see the result of that system which had been introduced by the banks in 1961.

Mr. Williams spoke at that time not only for himself and for many of us, but also for the staff of the Post Office, who have always been keen to get this system introduced. One of their Associations, the National Federation of Sub-Postmasters, has been particulary active in getting this system known and in issuing propaganda for its adoption. Post Office staff associations have been pressing for its introduction for a long time and have been continually assured that the matter is under consideration by the Government.

The last time it was discussed in the House was again in 1963, on 6th December, when, in a speech on the Post Office (Borrowing Powers) Bill, my right hon. and learned Friend the present Home Secretary received an even more discouraging response from the then Assistant Postmaster-General. But there has been one development since then—we passed the Trustee Savings Bank Act in 1964 which enables the Trustee Savings Bank to issue cheques and in that way to help to get payments made between individuals and businesses in this country without the use of cash.

I hope that the House will agree with me that up to the moment I have been purely factual and have dealt with points which are common ground to everyone in the House. Now perhaps I may be a little more controversial, because I suggest that these tentative steps which have been taken by the Post Office Savings Bank, by the commercial banks and by the Trustee savings bank are in the right direction but are not enough.

The first time that I came into contact with the system was when I was visiting a friend in Belgium, some years ago, and saw him paying an account in this way. I asked him what he was doing, and he explained the system to me. I then expressed some surprise, first, that I had not heard about it and, secondly, that we had nothing like it in this country. Subsequent examination and study of the subject has convinced me that the giro system is convenient, it is simple, it is effective, and it has been successfully operated in other countries.

I have here a short extract from the Financial Times of 9th February, 1963: The need for the United Kingdom to modernise its money transmission service by introducing a postal giro system of the type operating in so many other advanced countries remains as great as ever. That is only one of many extracts I could give from the Press which seem to me to show that there is a growing realisation of the value of this system and a growing demand that it should be adopted, or that something like it should be adopted, in this country. In fact, I cannot for the life of me understand why it has not been adopted, unless it is the fairly obvious reason, the opposition of certain vested interests, particularly the commercial banks.

The Post Office Savings Bank was a great pioneering effort about 100 years ago, but I submit that it is out of date and insufficient for the needs of the day. There is far too much money passing about, and, of course, that leads to much of the increase in crime we have been having lately, such as the notorious wage snatches which seem to go on week by week. One description which I saw of our system of using so much actual cash in the settling of accounts said that it was like fetching water in buckets from wells rather than using a modern plumbing system.

The House itself recognised this difficulty and this need when we passed the Payment of Wages Act in 1960. That Act, as we all know, has not been very much of a success. Why? It is very obvious, I think. The worker realises the difficulty there would be in cashing his wages cheque. The bank is closed when he finishes his day's work and he has to ask a small shopkeeper, or someone else, to cash the cheque for him. He does not have a bank account because he realises that bank charges will be involved and, therefore, he does not want payment by cheque.

According, again, to the Financial Times, only about one-fifth of adults have bank accounts—that is, at commercial banks; other people have accounts in the trustee savings banks, but certainly not a very large proportion of the population. I believe that the banks are now to close on Saturdays altogether, which will make it even more difficult for workers to cash ordinary cheques.

The Financial Times also wrote on 31st March, 1962: There is no doubt that the discovery that commercial banks not only do not pay interest on current account funds but may even levy a charge on the customer for his use of money transfer services tends to be a major obstacle to the recruitment of working class customers whose banking experience has previously been concerned only with savings institutions. So far as I can see the giro system meets the need which is emphasised by quotations of that kind. It has been running in other countries, and so it has been tested. This is not an untried idea. Incidentally, it occurs to me that up to now those other countries have not had the great advantage of modern electronic computers, which would surely make it much easier to run a central clearing system for a giro service of this kind.

While we are well ahead technically and scientifically in many things in this country, and are at the moment considering such things as the introduction of the metric system and a 24-hour clock and one or two other things which have been in operation elsewhere for a long time, we are very loath to adopt systems which are operated elsewhere. We like to inaugurate new systems, but we do not very much like to adopt other people's ideas, I suggest that we ought to benefit from the experience of others, and that while it may be painful for us to do so here is an opportunity to adopt something which would be of real public service and perhaps of great benefit to the Post Office as well.

Up to now we have had the discouraging replies which I have mentioned. Today, I am hoping that we shall get better news. Today, we have a very progressively minded Postmaster-General in a progressively minded Government, and I hope that today he will give us a favourable reply.

4.25 p.m.

Mr. Ray Mawby (Totnes)

I think that the House will agree that the hon. Gentleman the Member for Accrington (Mr. H. Hynd) has put forward his case in the very reasonable and courteous way he usually does, and as we always expect him to do whenever he has a case to put to the House. When he refererd to my reply when I was Assistant Postmaster-General, the reply on 4th March, 1963, to the late Will Williams—and we all still deplore his passing—that was the first effective day of my period of office as Assistant Postmaster-General. Therefore, I think that the second reply which I gave, and which the hon. Gentleman also quoted, the one on 6th December, 1963, probably represents more my point of view than the first one.

Upon first coming into office and upon hearing the case so well put by the late Will Williams I was attracted to the scheme. It has attractions. After all, it makes it possible to make certain that wages can be paid by cheque, or, indeed, as the hon. Gentleman said, to be paid directly into one's account by quoting one's number. Obviously, there would be far less cash moving about the country because it would be a matter of credit being transferred from one person to another, and so there would be less opportunity for the many robberies which take place, and which, we must always remember, while involving property, also involve so many postmen and others who are thus brought into danger—of being coshed, for instance—and of suffering very badly indeed.

At first sight the scheme is very attractive indeed. There is also the other point the hon. Gentleman put, that the post offices normally are open for longer hours than the joint stock banks. To the ordinary person wanting to transact business the fact that the post offices are open very often at times when he ceases, or before he begins, work gives it an additional attraction.

However, I think that, after one has said that, one has to look very closely at the whole system and particularly where it has been in operation for many years, as the hon. Gentleman has said, in various Continental countries. It is important that one should pay attention to what the Radcliffe Committee said in its Report. The hon. Gentleman was very fair in pointing out that what the Radcliffe Committee said was that in the absence of an early movement on the part of existing institutions to provide this sort of credit transfer system the Post Office would be advised to institute a scheme of this sort.

As the hon. Gentleman said, the banks have introduced the credit transfer system, which is something that one does not find on the Continent. There are many reasons for this. One of the main compelling reasons is that there they have a giro system which provides facilities equivalent to those of the credit transfer system. There is, therefore, no reason for the Continental banks to introduce a credit transfer system such as we have here.

The next point that we have to consider shortly is whether the system would be able to provide the services required and be able to pay its way. I spent some time on the Continent looking at the systems there. I found that in most cases they do not pay their way, that, in fact, they make a loss. But this is not a reason for ruling out the adoption of the giro system. If it provides a valuable service, and other Post Office services get additional benefits, the fact that it might itself lose money is not a compelling reason for not introducing it, but it is one of the factors to be taken into account.

The giro system as operated on the Continent falls into three main sections. First, there is the section in which the person who submits a bill has an account, and has invested money in the system, and the person who pays that bill also has an account. In other words, the two people involved in the transaction have accounts in which they have invested money. That is the first leg of the system.

Secondly, institutions such as electricity boards, insurance companies, large stores, and so on, have accounts with the giro system, but most of the people to whom they send bills do not have one, and they have, therefore, to go to the Post Office to purchase the necessary cheque by which to pay their bills.

Thirdly, the person submitting the Bill does not have an account, but the person paying it has, and, therefore, the person who receives the cheque has to go to the Post Office to receive his money, less the service charge made on the transaction.

The important thing to remember is that to get the scheme off the ground one must have a large number of people who have an account number, and who are prepared to invest money in the system. On the Continent a charge is made for the second and third legs of the service, but no charge is made for the first one. The reason is that the service under the first leg is paid for by the interest accruing on the money invested by the account holders. If the system is big enough, the amount of interest accruing will remain constant, because it is merely a matter of credit going round in circles, as the name giro suggests.

If we are to say that anyone can be a holder of a giro account, there must be sufficient money invested at the beginning to provide the Postmaster-General with enough interest to pay for the service, otherwise he will have to make a charge to those who want to use it, and if a charge is made many of the attractions of the scheme will disappear because it will not be able to compete with equivalent services provided by other institutions, probably at no charge at all.

Many of the continental institutions are account holders, and have an account number. Their bills are presented in such a way that if the person who receives them is an account holder he can pay them by putting them in an envelope and signing the necessary form. The money is then debited from his account, and credited to that of the institution. If he does not have an account, he can go to the nearest post office and purchase the necessary credit to pay the bill.

One of the great advantages of this system is that it enables an undertaking to reduce the number of its employees. For example, in the normal course of events an electricity undertaking ensures that a cashier is on duty at its showroom. It is his job to accept money from people paying bills, to give them receipts and change. If, however, that undertaking had a giro account, all the people to whom it sent bills could transact their business at the post office rather than go to the showroom, and it has been shown that people would rather carry out the physical side of a business transaction in places other than electricity showrooms and insurance offices.

If it were possible to prove to the institutions that they could quickly reduce their overheads by investing a large amount of money in an account with the giro system, we would have a large amount of money which would provide the Postmaster-General with the necessary interest to pay for the servicing of the scheme, which, obviously, will be pretty high.

The problem is that on the Continent there are few wage earners who even now hold giro accounts, although it is true that many people have got into the habit of going to the Post Office to purchase the necessary credit to pay their bills. The bills are presented in such a way that this is the best way of paying them. There obviously has to be a charge for this service, yet very few people are prepared to open an account and invest a sum of money on which they will not draw any interest.

In this country the banks operate a credit transfer system, and the question that one has to ask is: have they scraped the bottom of the barrel, or are there ways and means by which we can attract people who, at the moment, do not use the credit transfer scheme into an alternative scheme of credit transfers whereby, although they do not become account holders, they will, nevertheless, be prepared to pay the necessary service charge to operate a credit transfer scheme operated by the Post Office? Even the Postmaster-General, who has all the facts in his possession, is unable to give a definite answer to that. He is forced into the realms of the unknown. He can only say what he thinks will be the number of people likely to enter into, or use, a credit transfer system operated by the Post Office in the future but who at the moment are not prepared to entertain such a system operated by the joint stock banks.

Therefore, right from the word "go", if a scheme is to be initiated it must attract a large number of account holders. The aim on the Continent—and it would have to be similar here—is that all the details of the transaction should be completed within 24 hours. The aim is that the person who pays the bill has his account checked to ensure that he is sufficiently in credit; the transfer of credit goes to the person presenting the bill; he is informed that that amount has been added to the credit of his account, and the payee is informed that he has paid that amount and that the credit in his account has been accordingly reduced—all within 24 hours. If that were not done people would not be satisfied with the system. That would obviously entail a great deal of work.

We would have to make certain that no giro account holder overdrew his account. The whole cost of servicing the system must rely upon the interest gained by the Postmaster-General from the money invested, and if a person went into the red it would be a liability rather than an asset, in the production of interest. The question then arises; if we are to obtain sufficient interest to pay for all the servicing do we say, right from the beginning, to each account holder, "A certain amount of money will have to remain in your account at all times, so that we can guarantee that we shall be able to draw at least a certain amount of interest"?

This is the rule in Switzerland. The minimum that has to be left in is not high, but that is the rule. An account holder cannot extinguish the whole of his account. A certain amount must be left in to pay for servicing, and so on.

Mr. Raphael Tuck (Watford)

Is not that exactly what the trustee savings bank demands here?

Mr. Mawby

That is true. My point is that a certain limit has to be decided, below which an account holder cannot go, and it is important not to fix that limit too high, so that potential investors are not put off.

The Postmaster-General may have a view, just as I or anyone else may have, of how many people would become account holders in the first instance, and how many would continue to invest in the future if the scheme got under way. It is entirely a matter of conjecture. All I say is that if we started a scheme and persuaded 5 million people to become account holders in the first place, we would have to provide that each account holder would have to leave at least £100 untouched in his account in order to make certain that sufficient interest accrued to pay the service charges. If more people joined the scheme a lower figure would be needed, and if the Postmaster-General could persuade a number of large institutions to join a sum of £1,000 would mean nothing at all to them. I am thinking of such institutions as electricity boards, gas boards and insurance companies.

Mr. Robert Cooke (Bristol, West)

My hon. Friend is suggesting that £100 might be the float required for each account. Does not he appreciate that even having to keep one week's wages locked up in such an account would be an intolerable strain upon many households in the country, whose members live from hand to mouth and have incurred quite a large hire-purchase debt, and that sort of thing?

Mr. Mawby

The most important thing is that we would be initiating something completely new to many people. Obviously, in the first place we would hope to interest people who, at the moment, have Post Office Bank accounts, but who are still suspicious of the activities of the joint stock banks, and who would prefer cash to a piece of paper. Up to now these people have been reticent in accepting the payment of their wages by cheque. These are the people that the Postmaster-General would hope to interest in the scheme first of all, because they are the ones who at the moment feel that they have no alternative but to rely on the system which operates at present.

To expect that type of person to be prepared to invest his money and to be told, when he wanted to pay an account, that he had exhausted his credit to the £100 level, would be to expect too much. We therefore have to reconcile ourselves to the fact that for a long time the use of this service would be in the second grade; that is, we would hope that large institutions would become account holders, but that most of the people who paid their bills would go to the post office to purchase their credit rather than going to the local showrooms or insurance offices, or have insurance agents calling at their doors, and so on.

The other difficulty—and this applies on the Continent—is that the costs of the scheme are normally covered by the interest that accrues on the invested money, and when there is a fall in the Bank Rate those who are operating the system, which may be a very efficient one, suddenly find that it goes into the red, not because of any action of theirs but simply because the Bank Rate has fallen and the amount of money invested attracts a lower rate of interest.

The hon. Member for Accrington said that one of the effects of the scheme would be to supply the Exchequer with funds at low interest rates. That is possibly true, but if we did that we would probably be asking Peter to pay Paul. If the money which is invested in the accounts by the account holders is to be lent to the Treasury at low interest rates the problem of paying the cost of servicing becomes more difficult to solve, because in running his Department the Postmaster-General ought to make certain that he receives the best rate of interest on the money he invests so that he can run his service at the highest possible standards.

Even the Postmaster-General can be thwarted—as has happened on the Continent—by a sudden change in the Bank Rate. Although the amount of interest accruing on the money invested suddenly falls the costs of the service remain constant, so that it goes into the "red", and some other part of the Post Office services has to cover the loss made on this service. That is another very important point which should be considered.

In a period of high Bank Rate, there is no question that the continental systems can break even, but there is no system in which Bank Rate is always high. The aim of the present Government, as of other Governments, is to make certain that Bank Rate does not remain higher than it need do. Whenever Bank Rate falls, it immediately puts the scheme into jeopardy. Most of the continental systems have a job to break even, and many make a loss.

The last point of substance is of how far we should extend the service of the giro system. From what the hon. Member for Accrington said—and from what has been said by the Association of Sub-Postmasters—the view seems to be that one should be able to transact business in a giro account even at sub-post office level, that is, with the grocer's shop or stationer's which has the concession to supply post office equipment. The general idea is that it should be brought down to sub-offices.

Obviously, if the institutions are to be interested in this, it must come down to sub post-office level. If people live in large towns, they are within easy reach of a Crown post office, and there is no difficulty for them, but, for the many people who live in villages and on the outskirts of towns, the fact that they would have to go to a Crown office instead of using their normal sub-office would put them off becoming account holders in the giro system. This would add greatly to the expenses of the scheme if it were put into operation. We would have to make certain that the local sub-offices were effectively in touch with the central office which had the accounts, were able, fairly quickly, to find out whether a person's account was sufficiently in credit and to be able to make the necessary arrangements to transfer the cash.

Mr. H. Hynd

The sub-post office might have a telephone.

Mr. Mawby

This is true, but I would point out to the hon. Gentleman that my experience on the Continent shows that, if one is to transact business and get it completed within 24 hours, the telephone is now accepted as being an antiquated instrument to do this job. One has to move into the realm of telex equipment and data transmission equipment if one is, in this modern world, to be able to carry out a transaction at the speed the customer would expect. The hon. Member may be quite right in that someone using a sub-office may be happy to be told, in three days' time, that his business has been transacted. In those circumstances, the present equipment would be quite satisfactory. However, the experience on the Continent shows that, if one is to satisfy the account-holder, the whole operation should be transacted in 24 hours.

We would have one advantage, that we could install the most modern equipment from scratch, learning from the experience of those on the Continent who are only now, in certain places, installing computers and memory-stores. However, even with that advantage, the capital cost of a system such as this would be very heavy. It is difficult to calculate what loss to existing post office services which would no longer be required because a person was using a different system.

I am talking of the reduction in postal orders, money orders, and so on, which would be reduced if the person was using a giro account. This would have to be taken into account. The Postmaster-General has far more up-to-date facts and figures than I, but I felt that I ought to put my views to the House, as one who was attracted at first sight to the system and who, even now, is not prepared to condemn it. I have tried to put some of the problems which we will have to face, inevitably, if the scheme is introduced.

4.55 p.m.

Mr. Raphael Tuck (Watford)

I would remind the hon. Member for Totnes (Mr. Mawby) that first thoughts are very often the right thoughts. It is stupid to exhort the public to sweep away obstacles to efficiency and urge them to be sympathetic to modernisation and interest themselves in computerised methods, as long as the national facilities which are needed to bring our financial, economic and social structure into line with other advanced nations in Western Europe are not provided by Parliament.

The transmission of money in exchange for goods and services is directly associated with about 99 per cent. of all commercial and private transactions. Unless great care is taken to ensure that the process of money transfer and receipt is simple, secure, and efficient, we shall find that the cost of transmission and receipt is added to the amount transferred and becomes a charge on the price of the goods and services.

British methods of money transmission—the bank cheque, the credit transfer, the postal order and the money order—are the most costly, cumbersome and inefficient in the world. These methods are the cause of colossal national inefficiency, wasted resources and even, as has already been said, criminal activities of many kinds—vicious attacks on members of the public and of bank and post office staffs. Successive Governments have failed—perhaps they have not been courageous enough—to introduce more modern methods into our system. Therefore, commerce and industry have been left to struggle with these archaic methods while all the time being exhorted to keep costs down, raise productivity and introduce scientific business procedures.

Where does the blame for this appalling position lie? I suggest that it must be shared between the banking interests and the Post Office. We pride ourselves on being an advanced civilised nation, but our money transmission methods cannot measure up to the needs of modern business management. Yet we stubbornly retain those methods. It has been said, and I agree, that the British people try to make things as uncomfortable for themselves as they can.

An example comes to mind. These cartwheels which we call pennies and which weigh down our pockets are, in Canada and the United States, smaller than a sixpence. We try to make things uncomfortable for ourselves. This stubborn retention of outdated methods must compare unfavourably with our Scandinavian, Austrian and Swiss E.F.T.A. partners, with E.E.C. and with many other countries in Asia, for example, Japan.

The question which arises is why should we not also have a money transmission system which is simple, cost-free, secure, and which provides an efficient means of transaction between payer and payee? There is no reason why we should continue to spend so much time in writing out bank cheques, credit transfer forms, stubs, counterfoils, postal orders and money orders, with all the ancillary preparation of things like letters, envelopes, advice notes, receipt forms, postage stamps and, not least, the obligation to pay stamp duty on this monstrous, inefficient, and unscientific method.

Mr. Robert Cooke

I hope that the hon. Member realises that the reason for this is the activities of the Inland Revenue, which the Government's Finance Bill proposals have done nothing to simplify—

Mr. Deputy-Speaker (Dr. Horace King)

Order. The hon. Gentleman must confine his intervention to the topic under discussion.

Mr. Tuck

In over 40 countries in three continents there is a postal giro service, which makes the British money transmission methods look like the fumblings of a primitive people. There have been previous debates on this subject. The supporters of a Motion have always been at a disadvantage because of the absence of general knowledge about giro—what it is, what it does, how it operates and how widely it is used, and the financial, economic and social ills that the country suffers as a direct result of not having this public service.

This lack of knowledge about giro appears to have been nurtured by successive Conservative Administrations. Perhaps to their banking and other free enterprise friends the propagation of information about giro is rather dangerous. We do not know. But the result has been that public pressure to establish a giro service has always been very small.

From time to time, hon. Members on this side of the House and Liberal Members have pressed the Conservative Government to introduce the giro service, particularly after publication of the Royal Commission's Report in 1959. The Commission said: There is some evidence for thinking that there is some demand for a simple transfer service, without the ancillary services which the banks offer to their customers.…We consider that, in the absence of an early move on the part of existing institutions to provide the services which will cater to the need we have in mind, there would be a case for investigating the possibility of instituting a giro system to be operated by the Post Office. The Conservative Government ignored this advice. They even chose to discredit giro so as to make their refusal to implement that part of the report appear reasonable. I would not suggest that they tried to mislead the public, but if they had, they could not have made a better job of it.

On 6th December, 1963, the hon. Member for Totnes (Mr. Mawby), who was then Assistant Postmaster-General, claimed that many Continental postal giros were operating at a loss, in particular that the Dutch giro had made a loss of £300,000 in 1962. When this was investigated, the Dutch authorities said that the amount was not £300,000, but 300,000 florins—which is rather a different matter. But in any case this was capital investment in computer equipment and not day-to-day loss.

The hon. Gentleman also claimed that if Britain had a postal giro service, and the country went in for a policy of cheap money, the service would fail and we would be in the "red". If he had referred to the French postal giro service he would have realised how unrealistic that claim was, because for years that service has operated on a cheap money policy of only 1.5 per cent. interest. The hon. Gentleman talked today about the hacking, but on 4th March, 1963, he said: … our estimate is that a giro which handled 1 million accounts would need the backing of balances totalling about £200 million, averaging about £200 per account."—[OFFICIAL REPORT, 4th March, 1963; Vol. 673, c. 173.] I remind the hon. Gentleman of what my right hon. and learned Friend the Member for Newport (Sir F. Soskice)—now Home Secretary—said about that. On 6th December, 1963, my right hon. and learned Friend said: 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."—[OFFICIAL REPORT, 6th December, 1963; Vol 685, c. 1577.]

Mr. Mawby

I remember the point made by the right hon. and learned Gentleman the Home Secretary. It may well be valid except for the fact that the money invested in the Post Office Savings Bank, draws interest whereas the money invested in a giro account would draw none. It is a moot point as to whether the same number of people would invest the same amount of money in the giro system when they would have no interest to gain as they invest now in the Post Office Savings Bank.

Mr. Tuck

The institution of a giro system would not preclude continuance of the Post Office Savings Bank. Many people in the management of day-to-day affairs would not want something that they get now under our banking system—a system of current account which is unwieldy, expensive and unscientific—

Mr. H. Hynd

And does not pay interest.

Mr. Tuck

—and, as I am reminded, does not pay interest.

The attempt to prevent the British public from learning about the advantages of the giro system has reacted through the Press on book publishers. The result has been that it took nearly 15 years for the author of the first book on giro to find a publisher in this country willing to risk incurring the displeasure of the banking world. Last October, the book "Giro Credit Transfer Systems" was published. It has been instrumental in building up a body of informed public opinion which now urgently looks to Parliament to introduce a giro system.

The author, Mr. F. Paul Thomson, a systems engineer, is one of my constituents in Watford. Mr. Thomson must be in a unique position, because this is the first book about an 82-year-old financial and economic system which has motivated Government planning in over 40 countries in three continents. When working in Scandinavia, Mr. Thomson was intrigued by the means used to transmit money and credit by the postal giro. He became so convinced that the principle should be extended to the British Post Office that he made a complete study all of giro systems.

As a systems engineer, Mr. Thomson was brought to the realisation that compared with the facilities provided both nationally and internationally through the giro for continental commerce, British firms and individuals were being forced to shoulder the cost and the inconvenience of an intolerable, inefficient, and time consuming money transmission system.

Mr. Thomson's book shows, inter alia, how British firms can obtain giro accounts abroad and makes recommendations as to how a British postal giro system could be organised. Such a service would lay the foundations of the computer-centred financial, economic and social reorganisation which Britain so vitally needs and without which we may not hope to survive as an advanced civilisation.

I want to refer to what my right hon. Friend the President of the Board of Trade wrote about the book. He said: Mr. Thomson has performed a very valuable service in presenting to the British public so thorough and convincing an account of the possibilities of the postal giro system. Clearly, the giro cheque systems of other countries have progressed far beyond anything known in Britain; and the present Post Office Savings Bank—a pioneering effort one hundred years ago—is now an anachronism hampered by artificial restrictions likely only to protect its commercial competitors. Mr. Thomson's admirably factual book leaves me in no doubt that a major reform and rearrangement of the P.O.S.B. on these lines would be of great benefit to the British public and to the smooth working of our whole economy. But perhaps an even more significant effect of the book is the realisation by the bitterest opponents of the postal giro service—the banking interests. The Journal of the Institute of Bankers declared: This very comprehensive study of postal giro systems should prove most useful not only to students who have no pre-knowledge of such procedures but also as an addition to the knowledge of those who have had the opportunity to examine the working of continental giros at first hand. I should point out that in 1961 the joint stock banks, possibly in an effort to forestall any possible official action consequent on the publication of the Royal Commission's Report, introduced what they termed a credit transfer system. That is a facility through the banks and is a device which was heavily advertised with the object of inducing employers to persuade employees to accept remuneration by that means and open accounts at banks. Perhaps it is a figment of my evil imagination to say that it was a plan to induce wage earners away from the Post Office Savings Bank, but I will leave it at that.

Some prominent bankers have declared that the credit transfer system is analogous to the Post Office giro system and have also said that a giro service would be against the public interest because it would merely duplicate the existing facilities. That is not so, and while I do not have the time to go into this issue of credit transfers, suffice to say that the Finance Houses Association's Quarterly Review—Volume 6, No. 2, for June, 1965—stated on page 45 onwards, in an article again by Mr. Thomson, that the credit transfer system was just as cumbersome and inefficient as the other systems which we already have.

Mr. Robert Cooke

The hon. Gentleman has referred to the June edition of that publication. Is he aware that in an earlier issue of the Finance Houses Association Quarterly Review Sir Ronald Thornton stated: The Post Office giro is a good system, but it is restricted. The banks think that theirs is better…. The banks are not satisfied as to the need for a … giro … but if … there is a demand for a centralised giro system, then they have their plans ready and could put them into effect within a reasonably short time.

Mr. Tuck

Of course, the banks are not satisfied. Nobody would expect them to be satisfied with such a service. Indeed, the bitterest opposition has come from the banks, as one would expect. They do not want any competition. It is time that we called a halt to this blocking of national modernisation and progress. An increasing number of people are realising that if we are to produce more, save more, be more efficient and encourage computer methods, one of the essential means for achieving this is the establishment of a comprehensive postal giro service. And it is only the Government themselves who can carry it out.

For years, all the Western European countries except the United Kingdom, Eire, Portugal, Spain, Greece and Turkey have benefited enormously from the beneficial procedures which are possible only as a result of a giro service of this kind. Is it not disgraceful to find the United Kingdom lagging behind in this backward fashion?

The proposal for a five-day week for banks, plus increased charges, makes a postal giro service even more necessary. Moreover, while cash is actually handled in large quantities there is bound to be a continuing upward trend in the number of crimes of violence involving money and those who carry it. A giro system would largely overcome these problems and concurrently increase national savings and provide salary and wage earners with bank and savings facilities which they do not have at present.

A Labour Government—and I emphasise "Labour"—could be justifiably proud of introducing a postal giro service. In addition to the obvious benefit to the economy and the community, such a service would represent a move in the best traditions of Socialism and co-operation. It is Socialist because it provides for the nationalisation of the means of payment and thus breaks the monopoly—

Mr. Robert Cooke

Ah!

Mr. Tuck

—held by the joint stock banks. It is a co-operative measure—

Mr. Cooke

Back to Clause Four.

Mr. Tuck

I would not go so far as that. But it is a Socialist measure. It is a co-operative measure also, because it provides the means whereby the profit earned by the account holders is shared by the account holders and the nation. The account holders benefit from the many types of free service available to them and the nation benefits from access to loans at low rates of interest. In Sweden, for example, this source of cheap money finances local authority housing development and post office modernisation. That is definitely an achievement. It has also been claimed that West Germany's astronomical and swift post-war recovery has been largely due to the economic facilities provided by its postal giro system.

We have in our hands the power to introduce a legislative Measure which would improve the financial structure of the United Kingdom and, therefore, make for economic stability and expansion. It would be an imaginative, stimulating and forceful token of the Government's determination to do this, if they took action now and introduced legislation to provide for a postal giro service. I urge the Government, in the most strongest terms, to find time in the next Session to do this.

5.16 p.m.

Mr. Jeremy Thorpe (Devon, North)

I intervene in the debate briefly to give my warm support to the Motion. Not for the first time have I supported a Motion of this kind and I hope that at last action will be taken on the subject. I pay tribute to the hon. Member for Accrington (Mr. H. Hynd) for having initiated this debate.

The hon. Member for Watford (Mr. Raphael Tuck) was rather straining my loyalty when he based his support on the fact that a Measure to introduce a postal giro service would be a good Socialist Measure. I approach the subject with the idea that it would be good Liberal competition. Perhaps we could compromise on it.

I was pleased that the hon. Member for Accrington mentioned Mr. Williams, the former hon. Member for Manchester, Openshaw, for whom we all had great affection and who made some excellent, useful and loyal speeches on Post Office matters. The last time I spoke on this issue in an Adjournment debate, to which the hon. Member for Totnes (Mr. Mawby) replied, seated next to me was the then hon. Member for Openshaw.

The hon. Member for Accrington mentioned that the matter had been opposed initially by Sir Herbert Samuel, the Liberal Postmaster-General of the day. Another one of his distinguished colleagues in that Administration was, of course, the father of the present Postmaster-General and I know that the right hon. Gentleman and I are agreed in feeling that whatever the reasons that existed for rejecting the Measure at that time, they must have been unimpeachable and must have had all the force of logic and lucidity behind them. I very much hope that I, speaking as a political descendent of the one, and the right hon. Gentleman, as the lineal descendent of the other, will be able to say that we are again in agreement, although that on this occasion we can come to a contrary conclusion.

The Financial Times stated on 18th August, 1962: There is hardly an advanced country where the official money transmission service is as cumbersome and expensive as in Britain". That is less slightly true today than it was then, the credit transfer system having since been initiated by the banks, but it is still very true of our banking system in this country.

The hon. Member for Totnes said that on the first occasion on which he had spoken on this subject he had been a little more enthusiastic than a closer examination of the issue might have led him to be. I found his speech today distinctly more hopeful and optimistic than his speeches on this subject when he was the Assistant Postmaster-General.

He asked whether or not it was likely to pay and cited the example of many European countries. There was a powerfully argued case in The Times on 19th January, 1965, when the General Secretary of the National Association of Sub-Postmasters indicated that in 1962 the Swiss post office had borrowed £135 million from its giro account for plant modernisation and had advanced £83 million to the Government for national projects whilst the French Treasury had benefited in the same year by a loan of £1,500 million. We are, therefore, dealing with large sums of money.

While it is perfectly true that credit transfer systems exist in this country, it is equally true to say—and I hope that the hon. Member for Bristol, West (Mr. Robert Cooke) will, if he wishes to intervene, rise to his feet and not make sedentary murmurs—that in Sweden there are the same credit transfer facilities working in the joint stock banks and that there is co-operation between the Swedish banks and the Swedish postal giro system. I believe that they work very closely together, indicating that the two can be interleaved.

I remember the hon. Gentleman saying in that debate that the initial cost of launching this system would be about £4 million, and I should like to have the right hon. Gentleman's view of the likely cost. On that occasion, the hon. Gentleman mentioned that a minimum average holding would be £200. Now, having considered the matter further, he has suggested a holding of £100, which I would consider to be nearer the average figure one would expect a giro holder to have.

Even the existing Post Office facilities are extremely expensive compared with what a giro system could produce. Postal orders and money orders cost about 1s. 3d. for every £10 and the cost may even have gone up.

One can briefly enumerate the advantages of this system as follows. The hours at which post offices and sub-post offices are open are far more extensive than those of the banks. This represents a convenience to the public. There are 23,000 sub-post offices and 2,000 Crown offices, and the giro system would provide a way in which they could give a very valuable and extended service. As it is, in the last 20 years we have extended the Post Office services in ways that were not even in the mind of any Postmaster-General 50 or 60 years ago. I have always had a very great deal of sympathy with sub-postmasters. They do not have a very large income—theirs is not a well-paid job—and the giro system would help them as well as the public.

Crime has been mentioned. I agree with the hon. Member for Watford that the Payment of Wages Act has not produced that fall in payment by cash that one would have hoped for, and this system is one means by which it could be brought about. It would also save a fair amount of duplication and, as a result, a fair amount of labour.

The giro system would be particularly valuable in the rural areas. Many rural people have cars, but those who do not are finding that communications are becoming increasingly difficult. Many branch railway lines have been closed down, and a good many bus services are being restricted. It is becoming steadily more difficult in remote rural areas for people to get to the electricity or gas offices to pay their bills. They would be immediately benefited by the giro system. I do not know whether, statutorily, nationalised industries are directed or persuaded but, in any event, such nationalised industries as gas and electricity should be encouraged to open giro accounts. Similarly, the system could be used for the payment of rates, and many other payments in respect of public services could be channelled through the Post Office system. Competition with our existing banks would also be a very good thing to have. There is nothing like competition; no human organisation exists that does not benefit by it. I have sometimes thought that there should even be a statutory limit on the majorities held by hon. Members.

Hon. Members certainly recognise the potential benefits of the Post Office in this respect. The post office in this House is somewhat exceptional. Apart from the fact that it is probably the only one that has a carpet on the floor, I understand that it cashes cheques each day to the value of about £2,000 to £2,500. I do not suggest that the House post office is in any way comparable with others; nevertheless, even those who are somewhat hidebound by tradition will admit that we have something that works here which is certainly well within the technical capabilities of post offices generally.

I very much hope that the Postmaster-General will be able to give us some good news today. It is not, perhaps, without coincidence that some 50 or 60 years ago—and here I am subject to correction—there was a move to provide cheaply-produced literature for people who might not otherwise be able to afford books. It was known as Benn's Sixpenny Library. I suggest that it would be in an excellent family tradition now if we were to set up Benn's Bank. It would be the people's bank, sited in all our existing post offices. I urge this on the right hon. Gentleman, not because it is Socialism or Liberalism, but because it will be good business for the Post Office, and a very real convenience to the public at large.

5.26 p.m.

Mr. Harry Randall (Gateshead, West)

I congratulate my hon. Friend the Member for Accrington (Mr. H. Hynd) on his luck in the Ballot, on his choosing the subject of giro for this debate, and on an excellent and persuasive speech. Many members of the Post Office will be extremely grateful to him for ventilating this subject once again.

In such a debate as this, reference to my late colleague, W. R. Williams, was inevitable, and I am grateful to the hon. Member for Devon, North (Mr. Thorpe), for speaking of my friend as he did. I am sure that, had he been here today, Mr. Williams would have thoroughly enjoyed himself; in fact, he might even have been sitting in a position from which he could have made an announcement that would have pleased many of us in another respect.

I have listened to the hon. Member for Totnes (Mr. Mawby) speak on this subject on three previous occasions. On the first occasion, he said: A giro would have the advantage of speed of transaction, longer opening hours and, very likely, cheapness."—[OFFICIAL REPORT, 4th March, 1963; Vol. 673, col. 174.] On the second occasion, when the hon. Gentleman said that the door was closed a little more tightly, I was a little dismayed, but this afternoon the hon. Gentleman has said that, in spite of certain arguments against the system, his mind remains open. I hope that the persuasiveness of my hon. Friend the Member for Accrington will make him realise that this is a service which the Post Office needs, which the nation requires, and which could be of great benefit to our people.

The most recent statement my right hon. Friend has made on the giro system was on 12th May when, in answer to a Question by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), he said: I have not yet completed my review and it may therefore be some time before I can make any statement. In answer to a supplementary question, my right hon. Friend said: I cannot say exactly when the review will be completed and the statement made. We thought it necessary to study the latest European experience and also to assess the implications arising from computer operation."—[OFFICIAL REPORT, 12th May, 1965; Vol. 712, c. 488–9.] I have no complaint whatever about that because of the inquiries my right hon. Friend has instituted. I am grateful that he has done this. After the two previous debates a very careful study was required before launching into a big and perhaps very complex Measure. I am therefore grateful that the Postmaster-General has undertaken an inquiry in the past few months.

The introduction into the Post Office Savings Bank of a postal cheque system, with or without giro, is a very old demand. It goes back to the early days of this century. It has been considered, argued about, campaigned for and inquired into. From the knowledge I have and the reading I have undertaken, I find that there is a good deal of opinion solidly behind the idea, but unfortunately, it has never been accepted by this House. There was the Radcliffe Committee of 1959. It expressed the need for a much more simple system of transfer of payments. That Committee said that it saw the need for an investigation. Then there were the two debates in this House in which my hon. Friends took part from the Opposition benches. We were unable to get the then Postmaster-General to accept the principle.

I am glad that my right hon. Friend has called for a review. The need for such a review is shown in the light of the changes which have taken place since the early agitation on this matter. Although the old arguments, facts and views can stand the test, nevertheless nothing stands still and there has been much change during the years. This is an additional argument for a careful review to be undertaken on this subject. As has been brought out in this debate, banking facilities offered by the joint stock banks have changed. They now cater for smaller depositors. They have also introduced credit transfer. The trustee savings banks have also introduced the cheque system which, I understand, has operated since 21st May. There is a charge for that service of 1s. per cheque, plus stamp duty. It is subject to an allowance of 10 free cheques a year for each £50 of retained balance. I also understand that 6d. of the charge goes to the joint stock banks. So this is good business for the trustee savings banks and the joint stock banks also get a little out of it.

A more immediate matter is the computerisation of certain aspects of savings bank work, which again is a reason why a careful review should be made. There is every justification for it. If my right hon. Friend is to announce tonight his intention to establish a post office giro system, it cannot be argued that he does it without thinking, without investigation, and rushes blindly into it. As has been said, this is no new idea. It is a simple system of credit transfer eliminating the need to handle notes or cash, and it would assist people who have no bank account. It is in operation in every major country in western Europe except Great Britain, Spain and Portugal. I do not like our partnership in this matter, and I shall be glad if we can get rid of it.

The strongest feature of a giro system is simplicity of operation. It is neither cumbersome nor expensive. In this country a large number of people do not need the more elaborate and expensive system provided by the joint stock banks. They do not need the credit facilities made available by the joint stock banks, or the substantial overdrafts or to transfer large sums of money. They do not require the greater facilities provided by the banks, nor do they want them. They want a simple form of transfer of money.

Let us take a glance at some of the facilities which the Post Office offers. They prove that the small man is interested. For example, about 650 million money orders and postal orders are dispatched each year, representing about £800 million. The great bulk is in postal orders—630 million, valued at £550 million. That is a colossal sum and in the main it affects the small man without a great deal of finance behind him. Each year 14 million money orders representing a value of over £230 million are used as another means of transferring money for people whom we would expect to support a giro system.

It is interesting to note that the money order system was introduced in this country in 1838, after 40 years during which it had been conducted on a semi-official basis. The number of money orders issued in the first year, 1839, was 138,000. Within a few years the number was running into several million and by 1880 it had reached 17 million. Postal orders were introduced later to cater for smaller sums at lower cost. This new service filled an enormous need and it rapidly outstripped the money order service so that by the end of the century the postal order service was running at 117 million with a value totalling £25 million. The Post Office showed the earlier initiative in developing money transactions.

Mr. Robert Cooke

I hope the hon. Member realises that quite a lot of postal orders are paid in through banking accounts at present, so the banks have a part in this matter.

Mr. Randall

Yes, but they are purchased at the Post Office counter. It was the Post Office which showed the earlier initiative by providing machinery whereby transfer of money could take place without the use of actual hard cash. How can we avoid the unnecessary passing around of large sums of money? The remarkable thing is that the Post Office was involved in this matter in the 1880s by the use of money order and postal order services. The Post Office entered a field which the joint stock banks were not prepared to enter.

To return to giro, it cannot be argued that there is no need for such a service. There is a need for facilities to enable people to transmit money cheaply and efficiently. Moreover, the service could encourage small savings and, what is equally important, the spread of banking habits. It could give a new boost to savings and give the necessary encouragement to the payment of wages by cheques.

I have an interest to declare. I have served in the Post Office for many years. I believe that it is time that the Post Office looked round for new services. This is a service which could bring revenue to the Post Office. I want that revenue for the Post Office. Why should not the Post Office get it? The Post Office long ago introduced postal and money orders. Why cannot the Post Office be permitted to do this? If there is a revenue to obtain, why should not the Post Office have it? Why should not the nation benefit?

The most important question is how to persuade people to change their old monetary habits. There are the joint stock banks. They make efforts to cater for the small depositor. The trustee savings banks have introduced their cheque scheme at Hull and South Shields. There is the Post Office Savings Bank, together with the constant appeals for saving, yet only half the wage earners are accustomed to the banking habit. The Wages Act has not been implemented to the extent that it might be.

In the giro system there is a possibility of doing an important thing for the people, namely, encouraging the banking habit to a greater extent. These are the factors which persuade me. I believe that giro is the one answer here. I know that the banks claim that their branch system has developed and that there is no need for an alternative system of money transfer. Why should not there be an alternative? I have already asked, as did the hon. Member for Devon, North, why there should not be a little competition. We cannot deny that the Post Office is already in the business for the small depositor. It was the forerunner. It has a large number of branch offices and sub-offices.

The hon. Member for Totnes came a little close to challenging the security of the services at sub-offices. I did not interrupt him at the time. I realised afterwards that this was not his intention. It was a question of speed. Sub-offices could cater for work of this kind. They could provide a service in villages. The Crown offices and the sub-offices cover every village and town. They are much closer to the people than are the banks. They would want to associate themselves with the giro system. The banks open from 10 a.m. to 3 p.m., when the small depositor cannot get there because he is at work. Saturday is a half day in banking. There is already a suggestion that the banks should operate a five-day week. Post Office counters are open all day. This is the type of service which should be handed to the Post Office.

I see in the giro system a service at low cost, if the experience of other countries is any guide. It is a service which should save the costs of accounting, manpower, collection of rates, gas and electric light accounts, and distribution of wages. I see also an increase in savings. My view is that these add up to a service to our citizens and to the nation which would be very welcome at this time.

5.45 p.m.

Mr. Gordon Campbell (Moray and Nairn)

The hon. Member for Gateshead, West (Mr. Randall) has, with his great knowledge of and interest in postal matters, told us with clarity of the services which are available in post offices. Like him, I congratulate the hon. Member for Accrington (Mr. H. Hynd) on raising this subject because, although it has come up in the House before, it has not had devoted to it the time which is available today and which it deserves if the possibilities and advantages of and objections to such a system are to be examined. I listened to the Adjournment debate in March, 1963. I was well aware then of the caution which my hon. Friend the Member for Totnes (Mr. Mawby), the then Assistant Postmaster-General, expressed and the reasons for it.

My reason for taking part in this debate is that I have lived in a country with a giro system. When I was a diplomatist in Europe, I lived in the country which we have been told by the hon. Member for Accrington was the founder of the system, namely, Austria. I have made many payments by the giro system. I also took the opportunity of studying it and examining, simply as a matter of interest, its suitability and adaptability for this country. I find the system attractive, though I have been to some extent deterred by the suggestion of the hon. Member for Watford (Mr. Raphael Tuck) that this is a Socialist system. The large majority of the population in Europe which uses the system is not under Socialist government.

This system is needed by the countries in Europe and it is useful there, but they have very different banking and other conditions. For historical reasons, our situation is not the same as that in those countries which have the giro system.

If sufficient support were forthcoming for the system, I would be in favour at first sight of its adoption. There is an alternative which has not been mentioned so far, namely, a combination with the banking system. I want first to examine the pros and cons of the system. I want to make some observations on its working as I saw it personally and used it on the Continent. Everybody can open an account and transfer money without actually handling cash. This is especially useful for those who have not bank accounts.

In Europe my impression has been that it is very largely used—here I confirm what was said by my hon. Friend the Member for Totnes—for paying bills by persons who have not got a giro account themselves. It is convenient for them to be able to pay several bills at one time at a post office. The creditor, whether it be a firm or an electricity board, sends a form with his bill which the debtor then takes to the post office and completes when the payment is made.

Hon Members have pointed out how convenient it is that there are so many post offices widely spread throughout the country and they have spoken of the convenience of the timing of their hours. Not only are they open for longer than the banks, but they are open at times which, on the whole, are more convenient to most people.

The system on the Continent is convenient to the firms which use it and the institutions, the gas or electricity boards or others with many accounts. This means that such institutions do not have to have offices with cashiers simply waiting for callers to arrive to pay bills and get receipts. On the Continent the system is cheap, but it depends on the patronage of many large accounts. It is the fact that many institutions use the system and leave fairly large deposits in it which enables the system to be run cheaply for all the customers using it. It is an essential element in such a system that it should be supported by a minimum number of institutions, large and medium sized, which can produce the base upon which a cheap system can be run.

We have rather different factors in the conditions in this country. First, four years ago the banks started their credit transfer system. I understand that a larger proportion of the population in this country has bank accounts compared with countries with giro systems. The reason is that once a giro system is in existence, bank accounts are not needed to the same extent. However, even with the credit transfer system a man who wants to pay in cash still has to go to a bank, which may be a considerable distance away, whereas there is probably a post office round the corner.

I understand that the Post Office has officially said that to start a giro system would cost about £4 million in capital expenditure. Perhaps the Postmaster-General will be able to comment on that. Experience in Europe has shown that the system is a cheap way of paying several bills at once, especially if the person paying wishes to do so in cash. Post offices are easily available and the giro system would do away with the separate addressing and so on now required by the present system of postal orders and registered post to different destinations.

Several hon. Members have mentioned the crime aspect. As the system would largely obviate sending money by post, it would remove the motive of many of the crimes concerning mail bags and against postmen.

The important subject of the payment of wages has also been mentioned. This is a vital consideration when the pros and cons of this scheme are considered. If it were to be found that the majority, or a large proportion, of wage earners was prepared to accept payment of wages through a giro account in the Post Office, or payment in cash over a post office counter, that would be an important factor in favour of the system; but I do not know, and I do not know how research can discover, whether that is so, and that may make all the difference as to whether this is a good scheme.

If most wage earners were prepared to use the system, that would probably have the effect of encouraging savings, as the hon. Member for Gateshead, West said, and the scheme would then have so much support that it would probably be efficient and worth putting into effect. We understand that the banks are now threatening that they may not be open on Saturday mornings, and that would deprive many people of the opportunity of making payments at a time when post offices were open. The reverse of that medal is that the queues at post offices where there are now queues would need to be reduced, because we would not want them to be made worse by the new system.

All this leads me to believe that considerable market research is necessary before a scheme like this is adopted in this country. This market research would need to discover to what extent small accounts might be opened for the receipt of wages and to what extent—and this might be discovered through the trade unions—it would be acceptable for wages to be paid in this way. We would also have to know to what extent persons who had no intention of opening accounts would use the giro system for paying their bills through the Post Office.

Thirdly, and probably most important, we would have to discover whether there would be enough large account holders, institutions such as local authorities for rate paying, large shops, insurance companies collecting premiums, electricity, gas and other services and perhaps hire-purchase firms. Considerable market research would be required to make sure that a minimum number of such institutions would be prepared to support the system.

The other possibility which I should like to mention was put forward in an article in the Economist on 17th April. It was suggested that it would be perfectly feasible for the giro system to be combined with the banks' credit transfer system. I do not know all the technicalities, but it was put forward as a workable suggestion and the Government should certainly consider it. The banks might be apprehensive about the giro system, but if they are to threaten to shorten their own working hours and are worried about competition, it might be in their interests to enter such a scheme on the principle, "If you cannot beat them, join them". That is putting it in its crude form, but as the credit transfer system is already working, the suggestion of a combination of the two systems should be considered.

The Postmaster-General will probably tell us tint he is investigating this matter, or that his review is continuing. Perhaps he can make a statement this evening and say that his review is complete. If he does make a statement, I hope that he will be able to say how much support by outside bodies he has been guaranteed before the system comes into operation. If he is still at the stage of considering the scheme—I know that he will want to look progressive, as the hon. Member for Accrington suggested—and if he is to make encouraging noises and to say that he is still investigating, some of his right hon. Friends will need to be brought in.

As I have indicated, the necessary inquiries will involve the Chancellor of the Exchequer and, probably, the President of the Board of Trade because of the institutions whose views will have to be sought. There will have to be inquiries of employers, commercial concerns and, probably, the trade unions. I was interested to note that, according to the hon. Member for Watford, the President of the Board of Trade has himself written a very favourable foreword to the book by Mr. Thomson about the giro system.

I am not able myself to judge what results research of this kind would produce. As the House will realise, having seen and lived with this system, I am attracted by it, but, in my view, it is important that we do not enter upon it here until we are certain that it will have the right measure of support. I hope that the right hon. Gentleman will tell us either what his present view about it is or that he will make a thorough investigation along the lines I have suggested.

6.0 p.m.

Mr. Dennis Hobden (Brighton, Kemptown)

This matter was debated in the House on 6th December, 1963. There is no question of introducing a new or as yet untried development in our monetary system. It is not a new idea at all. In fact, it goes back many years in other countries. It is quite a mature system and a thoroughly proved method of cheap and speedy transfer of money for those who are concerned with comparatively small sums, wage and salary earners, shopkeepers, and so on. It has been debated in the House many times and its outlines are well known.

The fact that the giro system is old and well tried prompts me to ask why we should still be discussing the possibility of its introduction and why it should be a widely used and popular system in many countries while in this country it is still at the stage of being considered.

On 6th December, 1963, my right hon. and learned Friend the present Home Secretary made very persuasive representations for the introduction of the giro system, but the campaign for it goes back over half a century. There has been a great change of atmosphere within the Post Office. I call to mind the action of the Postmaster-General in 1912 in forbidding the then United Kingdom Postal Clerks Association, which was later merged with the Union of Post Office Workers, to conduct a public campaign in favour of introducing a postal cheque and giro system in the Post Office.

The attitude of the staff was that they wanted the Post Office to give the best possible service to the public and to keep abreast of all the latest developments. But they were forbidden to carry on, on the ground, apparently, that Post Office developments were the business of the Postmaster-General and his administration and the staff must keep in their proper place, without interfering.

In our own day, we have heard many complaints that workers are not interested in anything but pushing up wages and cutting hours. On 10th July this year, the Chairman of the National Board for Prices and Incomes said that Britain has suffered more than any other country from "the alienation of the worker from the purpose of industry and this meant that he had no interest in raising production". In this connection, it is instructive to remember that in 1912 it was the workers who wanted to improve their service to the public and the Postmaster-General who told them to mind their own business.

Things have changed a great deal since then on the administrative side of the Post Office. The Postmaster-General and his Post Office administration would certainly not now dissuade the staff from advocating what they thought to be a useful development. Those of us who have been associated with the Post Office over many years know that between both sides in the Post Office there is a tremendous movement for joint productivity effort, which, I am sure, my right hon. Friend will mention in due course.

The Post Office staff associations are still interested in improving and developing their services, but still, after half a century, we have no postal cheque and giro system in this country. What are some of the reasons for this hold-up since 1912? If, in 1912, the Postmaster-General had had a different outlook and, instead of blocking this innovation, had tried it out, we should not now be wondering whether it was possible to have the giro system. It would have grown up with us and become an accepted institution in the Post Office. Moreover, the difficulties of introducing it at that time would have been less formidable than they are now.

At that time, the Post Office was regarded as a revenue-raising Department for the Chancellor of the Exchequer. We sometimes think that it still is today. But there was undoubtedly a reluctance to embark at that stage on an experiment which would have taken some time to introduce and about the profitability of which there might have been some doubt. But 1912 was also the time when the Post Office was engaged in taking over the telephone system, and the reason for that was the widespread complaints of business men and others about the quality of the service provided by the companies.

Mr. Deputy-Speaker

Order. The hon. Gentleman must not pursue that point about the telephone service. He has missed most of the debate, but he must still keep in order.

Mr. Hobden

I beg your pardon, Mr. Deputy Speaker. I was endeavouring to go back over the years to show why the giro system had not been introduced.

There was at that time massive opposition from the commercial banks to the idea of the Post Office Savings Bank entering, even on a limited scale, into competition with them, and the opposition of the banks continued right up to 1928 when a committee of the Post Office Advisory Council reported against introducing a postal cheque system on the continental model "at the present stage". However, it did recommend consideration of a system of limited cheques available to Post Office Savings Bank depositors with adequate balances as a means of testing the extent of the demand for cheque facilities among this section of the community". Even that limited development was not introduced, although a partial approach had been made to it in the facility for a Post Office Savings Bank depositor to withdraw money by crossed warrant payable through a bank to a person specified by the depositor.

Coming more up to date with some of the objections which have been raised to the introduction of the giro system, the hon. Member for Totnes (Mr. Mawby), who was Assistant Postmaster-General at the time, raised several objections in the debate in 1963, though not, he said, as arguments against the usefulness of the giro system where it existed but as reasons for moving cautiously in the introduction of it in this country. He said that we ought to be extremely careful about it.

In 1959, the Radcliffe Report prefaced its recommendation that the possibility of introducing the giro system be investigated with the words, … in the absence of an early move on the part of existing institutions to provide the services which will cater for the need we have in mind…. It is certainly true that the commercial banks have introduced a credit transfer system within recent months, but has it really developed in such a way and to such an extent as to make the introduction of a giro system into the Post Office unnecessary? One of the problems confronting the banks has been to get ordinary people in the lower income groups used to the introduction of the cheque transfer system, and the hon. Member for Totnes, a year or two ago, instanced as one of the difficulties of making giro practicable that many people are reluctant to make use of banking facilities, and that many of the workers who have gone over to payment of wages in a form other than cash want immediately to convert it into cash.

The hon. Member went on to say: We are, therefore, confronted with the great problem of converting people to a system to which they have never been acustomed and which, at present, they are not prepared to accept."—[OFFICIAL REPORT, 6th December, 1963; Vol. 685, c. 1579.] That was regarded as being a reasonable statement of the position at that time, but I do not believe that it is a problem which is insuperable and one which we should not make some attempts to solve now.

I gather that, in spite of reluctance, there are more and more workers whose wages are paid through the banking system. The Financial Times made reference to the position as far back as 10th July of this year and said that among office workers the cheque system through the banks continues to make good progress but that among the others it is proving a decidedly slow business. That was with reference to the Lombard Bank. That article is interesting because it gives the example of a firm, the Carborundum Company, which, by persistence, has got almost all of its factory employees to agree to take payment by transfer to accounts opened in their names. They have also agreed to take payment monthly. The firm saw the all-round advantage of the change-over and offered some "substantial financial inducement."

Clearly, we must not be put off by talk of the difficulty of getting people educated to the use of a new system which will be advantageous to them. The Lombard Bank has also mentioned another development. Some firms are now employing industrial security companies like Securicor to collect money from the bank, make up individual wage packets, and deliver them to the point of distribution. It is said that that practice is growing rapidly. It has obvious advantages in beating the wage bandits and takes some work off the companies' own shoulders, but it is admitted to be second best to the full use of the banking system for wage payments.

Undoubtedly, the case for and against regarding giro as practicable in this country turns largely on whether or not it is widely supported. The hon. Member for Totnes, when Assistant Postmaster-General, argued that a giro scheme has to pay for itself out of the excess deposits that can be invested and bring in revenue to cover the costs of its operation. He said that in his view, if any charge was made for the use of the service, it would immediately put it outside all prospects of consideration. It appears from that statement that the hon. Gentleman thought we would need a depositor in the giro system to allow, say, £100 of his invested capital to be treated as non-interest bearing money so that he could use the giro transfer service

Mr. Thomson, in his book, "Giro Credit Transfer Systems", points out on page 31 that leaving deposits in a non-interest bearing account in order to use cheques is exactly what happens in any commercial bank and, in addition, the depositor pays for the chequing service. The hon. Member for Totnes also referred to continental experience, showing the impossibility of a central clearing service.

There are a few other points in favour of the introduction of the giro system. The shorter opening hours of the commercial banks compared with Post Office hours and the expected early move towards curtailing bank opening on Saturdays, is a point in favour of the introduction of the giro system, and a Post Office giro would offer a big competitive advantage as against bank cheque and credit transfer from this point of view.

In his Budget speech, the Chancellor of the Exchequer announced changes in Post Office savings banking consisting of a higher rate of interest, comparable with that paid on deposit accounts in commercial banks, for Post Office Savings Bank deposits above, say, £50, and subject to one month's notice of withdrawal. None of the details of the scheme has yet been worked out firmly, and it is not expected that the change will be ready until well into next year.

We now have to consider the position at which we have arrived today. In the debate that took place on 6th December, 1963, there were several references to the degree to which the door to the introduction of a giro system was or was not open. On 23rd July, 1963, the door was said to be just about the same as it had been in March, 1963. On 6th December, 1963, the hon. Member for Totnes said that his present view of the matter was that, if anything, the door was a little more closed than it was before.

Having regard to all these facts, as an ex-Post Office employee of about 30 years' standing, I believe that the time is long overdue for the introduction of the giro system which has been well tried abroad, and I hope that we can hear from my right hon. Friend the Postmaster-General that at last we have reached the stage where we are to have some concrete proposals for the introduction of a giro system into our own Post Office.

6.17 p.m.

Mr. David Gibson-Watt (Hereford)

The hon. Member for Accrington (Mr. H. Hynd) is to be congratulated both on his fortune in obtaining a place in the Ballot and also on the way in which he opened this every interesting debate. These half-day private Members' debates come as a very welcome part of the debates in this Chamber and can well be described as a sort of calm between the storms.

The hon. Member's subject, the giro, is not a subject which is well known to hon. Members who are without experience of the Post Office, but the debate has not been lacking in hon. Members with experience in the Post Office who have risen, and they have given us the benefit of their views. I refer not only to the hon. Member for Brighton, Kemptown (Mr. Hobden) but to the hon. Member for Accrington and to the hon. Member for Gateshead, West (Mr. Randall), to whom we always listen with a great deal of interest.

The questions which have been asked today are, would this system be of benefit to the British public and is this a service which the Post Office should initiate to serve the public? As we have read, on the Continent variations of the system are freely used—and not only on the Continent but in Japan as well. We have been told all about the countries which have got the system, but we have not had any debate at all about the countries which, for various reasons, have not adopted it. It was my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell), from who we heard one of the most interesting speeches, who himself had experience of using the giro system while he was on the Continent in a diplomatic capacity. I think that he was absolutely right when he said that if an economic case could be produced, then this was a matter into which market research should be undertaken.

It may well be that in replying to the debate the Postmaster-General will tell us that he has had market research undertaken and that as a result he has taken certain decisions. If the Financial Times is anything to go by, we must note that in an article on page 11 we are told by "Lombard" about a much-leaked announcement which the Postmaster-General is expected to make today about the Government having decided in principle to introduce a postal giro". He says that this will be welcomed and goes on to argue the benefits of the G.P.O. and the banks joining forces.

I do not accuse the right hon. Gentleman of leaking this information. After all, this matter has been discussed in Post Office circles, as we were told by the hon. Member for Kemptown, since 1912. We have heard of the unholy alliance between the so-called political ancestors of the Liberal hon. Member for Devon, North (Mr. Thorpe) and the ancestors of the Postmaster-General who, for some reason, got together at that time in history, 50 years ago.

But I will not argue the case of 1912. I want to argue the case whether in 1965 in the present set-up, the commercial services which we have in Britain are adequate for the British public. Do they cover everybody? This is the heart of the problem. Is everybody covered in this country who wishes to make use of a transfer credit system? Do the banks cover the population's demand? The banks have come in for fairly heavy criticism from one or two hon. Members opposite. The hon. Member for Watford (Mr. Raphael Tuck) gave them a fair crack. They are very well able to look after themselves in all this, and I would only say in passing that any Government would be in a pretty bad way without the banking system of this country, and there are times when senior Ministers of every Government lean on them and ask their advice. But I am not here to protect the banks, which are very capable of protecting themselves.

As has been rightly said in the debate, nobody has ever advanced the giro system better or more compellingly than the late Member of the House, Mr. Will Williams. We all remember him as a friendly and well-loved Member. How much we miss him. Like others, he had had a long experience of the Post Office, and in September, 1959 he told us that the Director-General of the Post Office had informed the Post Office Department on the Whitley Council that the matter was under close examination. As we know very well, we had the Report of the Radcliffe Commission which said: We consider that, in the absence of an early move on the part of existing institutions to provide the services which will cater for the need we have in mind, there would be a case for investigating the possibility of instituting a 'giro' system to be operated by the Post Office. After that we had the moves made by the joint stock banks and the history which followed.

Now we come to the very interesting book which has been written. The hon. Member for Watford had a slight advantage over other hon. Members in so far as the author of the book, Mr. F. P. Thomson, is one of his constituents. The hon. Member is, therefore, better briefed than we are. I have read the book. It is a very interesting book. It appealed to me from a purely humorous and political point of view to discover that the publishers in this country were the Pergamon Press, with which, as we know, the hon. Member for Buckingham (Mr. Maxwell) is closely connected, and to discover that in New York the publishers are the Macmillan Company. If I may say so, Mr. Thomson has chosen curious bedfellows.

It is an interesting book which has been described, I understand, by Mr. Thomson on the radio today. Someone said to me that it was all very well a person being allowed to put forward on the radio the case in favour of the giro, but why was no one put up to speak against it? But anyone who knows anything about broadcasting and television knows very well that to argue a negative is not news. What Mr. Thomson put forward has also been put forward in a good broadsheet which has come to my attention—again published by the Pergamon Press.

It seems to me that this idea of the giro has had a pretty good send-off. It is not often that one finds a book which shows that it has the rather doubtful benefit of the blessing of the present President of the Board of Trade in a foreword and one reads at the end of the broadsheet: The Chancellor of the Exchequer, Mr. James Callaghan, has declared, 'I am in favour of extending the giro system in this country'". Whether it is an advantage or not to have such backers, I would not say, but certainly this idea of launching the giro does not lack at all in public relations.

Be that as it may, we have to decide whether this is an economic, viable idea. Of course it has its attractions. My hon. Friend the Member for Totnes (Mr. Mawby), who has taken part in several debates on the subject and whose knowledge about it is considerable, says that the idea appears to be attractive, but he produced some important money figures concerned with carrying it out. It is said that if we are to have the giro system in this country we must have five million people prepared to put forward £100. This is the figure which I have been given, and no doubt the Postmaster-General, who has much greater facilities available to him, will correct me if I am wrong.

Indeed, if he has ideas about launching a giro system he may well be able to tell us what sort of support he envisages getting from business houses, insurance companies and others in the country. Let us make it certain that none of us on either side of the House wants to see the Exchequer losing a lot of money on a giro. When we talk about the Post Office losing a lot of money, we can be certain that that is one and the same thing. We must consider this point in considering the ability of the Post Office to run this scheme. My hon. Friend the Member for Moray and Nairn made a very good point when he said that in certain post offices there is a great deal of congestion. That must also be considered. Above all, let us recognise that we must have some backing from the business houses of the country if the scheme is to succeed.

I do not intend to speak at length, because a great deal has been said in informed debate upon it. I do not discard the arguments put forward today for the giro. I merely ask that in considering them—as they have been considered over the years—we should be absolutely certain that if such a system is introduced in this country it will be viable. I am sure the Postmaster-General will accept that one of the difficulties of carrying out an experiment on a regional basis is that the regions are not the same. If a number of subscribers were required for a United Kingdom system we would get far fewer subscribers, and, therefore, they would have to subscribe more for a regional system experiment. Therefore, it is not easy just to make an experiment. If the system is to be carried out, it is a question of the Postmaster-General diving in at the deep end.

I hope that the Postmaster-General will tell us what his thoughts are and what he thinks about suggestions put forward in both the Economist and the Financial Times of 21st July for some sort of co-operation between the Post Office and the banks on the giro system.

Mr. Robert Maxwell (Buckingham)

I must declare my interest as the publisher of the book to which reference has been made. I am grateful for the kind remarks. Would the hon. Gentleman be more positive about the giro? Will he hear the three considerations which prompted me to publish this book? First, Mr. Thomson had devoted a lifetime's effort to it and he could not find anybody in this country to publish it for him. I was very impressed with his argument, and as a businessman I felt certain that I should like to use the giro myself. Secondly, I believe that the giro will reduce by about 90 per cent. the hit-and-run raids on cashiers. Thirdly, I believe that it would increase the efficient use of resources in the United Kingdom and thereby help our modernisation. In these circumstances, I wonder whether a warmer welcome for the scheme might be forthcoming from the Opposition.

Mr. Gibson-Watt

I never like to be accused of being lacking in warmth, but if the hon. Gentleman had been here during the debate—no doubt he has been kept elsewhere—he would have heard the arguments put forward by hon. Members on both sides of the House and the very strong arguments put forward on his second point, namely, the increase in smash-and-grab raids and the increasing danger of carrying money in vans. I agree with him over that point.

I hope that it does not appear that my speech is praising the giro system with faint damns. That is not what I intend to do. All that I am saying, speaking for the Opposition, is that it is for the Government to say, as it would have been for the Conservative Government to say some months ago, what their views are. I still advance the contention that if we are to have the giro system we should have the market research asked for by my hon. Friend the Member for Moray and Nairn and some idea that the system can be successful and will carry out what its protagonists and those who support it want. We should know whether it is viable and can do a real job as it has done in other countries on the Continent.

We look forward to hearing from the Postmaster-General whether he and the Government favour the giro system and whether they intend to carry it out.

6.34 p.m.

The Postmaster-General (Mr. Anthony Wedgwood Benn)

I join the hon. Member for Hereford (Mr. Gibson-Watt) in welcoming the opportunity to debate this matter. This has been a remarkable debate, for many reasons, first, because of the very serious contributions made by all those who have taken part in it and because of the near unanimity of support for the idea of a giro if it is a practicable operation.

I congratulate my hon. Friend the Member for Accrington (Mr. H. Hynd) on his luck in winning the Ballot, on his wisdom in choosing this subject and on the skill of his speech. I congratulate, also, the hon. Member for Totnes (Mr. Mawby), who, I hoped, would speak in the debate and whose speech was of great interest. He looked back on his maiden speech as a Minister. In mature retirement he will realise that today's speech was better than the one which he made when, as a maiden ravished by the Treasury, he was doubtful about the giro.

My hon. Friend the Member for Watford (Mr. Raphael Tuck) paid tribute to an illustrious constituent, Mr. Thomson, who will be remembered not for having thought of the scheme—for it is an old idea—but for having worked extremely hard to get people to understand what the giro can offer.

The hon. Member for Devon, North (Mr. Thorpe) went so far as to suggest that it should be called "Benn's Bank". This is a very attractive idea, but it would not give any special facilities to me. If I write a cheque "Pay the Postmaster-General", I am not allowed to cash it myself. But although these are attractive thoughts, they do not bear very much on the discussion.

My hon. Friends the Members for Gateshead, West (Mr. Randall) and Brighton, Kemptown (Mr. Hobden) spoke on behalf of the Post Office workers who have long been interested in the giro. The hon. Member for Moray and Nairn (Mr. G. Campbell) saw it as a consumer in another country.

This matter has a very long history. Reference was made to the possibility of a leak. That is a difficult exercise if one has been engaged for 40 years and is contemplating matrimony. These arguments have been going on for a long time. What the House wants to know is whether this is a practicable scheme.

The last Government considered the matter very carefully. Mr. Bevins made a speech to sub-postmasters in which he gave a broad hint of his own views. But the previous Government came to the conclusion in the speeches referred to in the debate that the giro was not practicable. I thought at the time that they were rather pessimistic about the likely outcome of a giro scheme, that they were unduly confident that the existing banking services could be extended to all those who did not have bank accounts and that they were a little negative in their approach.

One of the first things which I did on taking office was to commission a fresh study of the giro as a possibility. This has been done with very great thoroughness. Further visits were made to Europe to study the latest experience there. Up-to-date surveys were made of the need and the prospects. The review revealed certain new factors which led us to consider the matter in a more favourable light than the last Government had done.

The first thing which came to light was the growing need for certain sorts of services not provided by the present remittance services of the Post Office or the money transmission facilities in this country. For example, over the last seven years, the mail order business has doubled in size. This is a clear indication of the need for some means by which remittances on this scale can be made available. Secondly, instalment payments, which are very important, have doubled in the last four years. Both these things are likely to increase still further. Turning to credit shopping, there is the renting of durable consumer goods, like television sets.

All these are things which have developed very greatly in this country. At the moment, people deal with them very often by cash payments in local offices or by postal orders or money orders, which are very old-fashioned and extremely expensive ways of transmitting money. This is done by people who do not have bank accounts. It is not a question whether the bank can offer its customers improved facilities, although that is something which naturally everybody welcomes. The question is what should be done about people who do not have joint stock bank current accounts. At any rate, as a result of our survey of the need, we came to the conclusion that the financial prospects for a giro were very much improved.

The question of market research has, very properly, been raised. What the Post Office is considering is this: can we modernise our existing remittance services? If so, in what way should we modernise them? If we modernise them in a certain way, what price would we have to charge and what is the potential demand?

I can only tell the House that on our basis of calculation at the moment it would be possible not just to break even, but to get an 8 per cent. return over the long run on a giro system with as few as 1¼ million giro account holders with an average balance of only between £100 and £150. All I can say about that is that if we compare those very cautious assumptions with the experience on the Continent we shall realise that assumptions of this kind really are more than reasonable.

For example, in France there are over 5 million giro accounts with an average balance not of £100 or £150, as we estimate here would be necessary, but nearly £400. Of course, the new giro accounts which one would expect would be divided, naturally, between institutional accounts, where the average balance would be very high, and the individual accounts where the average would be very much smaller, but what happens is that while one person's account goes down another person's account goes up, and money circulates, and as little money as possible, one hopes, leaves the system.

So it should be attractive for these new customers. When one considers their possible number one is encouraged by the prospects. Moreover, we can now contemplate automation at the outset, with very great advantage in terms of cost.

As the result of this survey the Government have decided that a Post Office giro, offering the same basic facilities as the European giro, would be a useful addition to the means of transmitting money, to the normal Post Office remittance services which have been more or less unchanged since 1881, and it would provide a cheap and efficient service for those without normal banking facilities who do not want the full range of services offered by joint stock banks.

Having said that may I come on, very briefly, since this has been dealt with by other speakers, to what the giro offers. It is really a very simple current account facility without the capacity to have overdrafts and without any interest payment or without any of the normal advisory services, some of which are highly sophisticated, offered by the banks. It consists of a very simple central clearing office where the accounts for the giro are kept and where all transactions are recorded. It is available to anybody or any institution wanting to open an account.

The system offers a transfer service from account holder to account holder which is accompanied in the case of the continental giro and would be here by a written note specifying for what purpose the money is transmitted—which is a very great advantage over, for example, the postal order. What would happen would be that this transfer slip would be sent to the giro office, which would send a debit to the man who made the payment and credit the man to whom the payment has gone and a note saying for what the payment was intended. It is an exceptionally simple and straightforward system which we contemplate would be free and without any charge whatsoever.

The next service is a deposit facility for putting money into the giro. This would be either by cash on one's own account or by a payment on a giro account at post offices where there would be a charge made, but a charge which would compare very favourably indeed with other charges made for other means of remittances or other remittance services, a charge of 9d.

Then there is, of course, the payment facility, either payment to oneself, which, in effect, is writing a cheque on one's own account. In certain offices there will be facilities available for up to £20 on demand, if one can establish one's identity, and that facility would be free of charge; and there will be facilities for a warrant which is cashable at a charge of 9d. plus whatever stamp duty is necessary.

Since the central office could be fully automated from the outset we should be able to have a 24-hour clearance service, which is very rapid indeed. We believe that the benefits accruing from the introduction of the giro would be widely welcomed, and not only by postmasters, of whom there are 23,000, including sub-postmasters. It is not only the postal unions who are interested in this but also the Federation of Sub-Postmasters.

Post offices are open all day and every day, including Saturdays, which is intensely important to those people who would be the likely users of the giro service, including, of course, the Post Office Savings Bank, with its 22 million people with live accounts. It will be simple, it will be quick, it will be economical. It will provide a regular record of balances and very easy bookkeeping. It would introduce what must be of concern to anyone in the Post Office, a safety factor.

Also, it would mean economy of manpower not only from the point of view of remittance services which will benefit by this, but, also, one can visualise the community as a whole benefiting greatly by virtue of the fact that the collection of money would be so much easier.

Who will actually use it? Most examples have been given to the House already—public utilities, mail order firms, charities, a very substantial number of business firms; almost anybody receiving large numbers of remittances will be interested in the service which the giro will offer. Indeed, we have an example—I cannot give the name to the House—of a very large enterprise indeed in this country which deals with tens of thousands of retailers with hundreds of millions of pounds going through its hands in the course of a year, and it expressed a positive interest in the giro because of the advantages which it would give to that enterprise, as it would to small businesses and to all the people who are required to make payments on a regular basis.

One can visualise the case of the ordinary insurance agent who is going round collecting money and who is responsible for dealing with a great deal of money. By means of the giro it will be possible for him to go into a post office and make out his payment to his office in this way, without the difficulty which he now has of taking it home and hiding it in a sock or putting it under the bed and hoping that burglars will not come to take it away.

One of my jobs is to present bravery awards to sub-postmasters and others who have been attacked by thugs, and some of the stories they tell are really quite hair raising, and anything we can do to make the transmission of money more secure will be of advantage to the community as a whole.

I come to the next question, which is, relations with the joint stock banks. I am very grateful that this point has been raised because it is, of course, very important indeed. We believe that the giro will be popular with those without bank accounts, of whom there are very large numbers, of course—an overall majority in this country. Hence the giro will, in terms of the individual, be moving into a more or less untapped market from the banks' point of view, and it will be replacing in this respect the existing Post Office remittance services.

This is the point I made earlier in respect of market research and a point made by the hon. Gentleman the Member for Moray and Nairn. We contemplate this as a modernisation of our own remittance services, and it follows from this that we see the giro as complementing the banking services and not replacing them. Having said that, it is quite clear that there must be links between the giro and the banks from the point of view of the national interest. If the nation is to have a comprehensive, modern, money transmission system, there must be quick and easy transfers between giro accounts and ordinary bank accounts, and I am confident that satisfactory arrangements with the banks will be reached on for direct transfers between bank accounts and giro accounts, and vice versa.

I very much hope that we shall also be able to reach agreement on another important point, namely, the compatibility in design of bank and giro forms, because what we are concerned with here is a national system which meets the requirements of a wide variety of people. I intend to initiate early discussions with the banks to consider arrangements for co-operation.

Mr. Maxwell

When discussing the question of the forms with the joint stock banks, will my right hon. Friend also bear in mind the need to use the same computer language? This will obviously be computerised, and it is, therefore, necessary that the language should be compatible.

Mr. Benn

I shall come to the computer technology aspect of the matter, but I am grateful to my hon. Friend for raising it, because compatibility now means computer compatibility when one is discussing an operation as complex as this. I might add that, obviously, the giro accounts will permit the transfer of money to and from Post Office Savings Bank accounts, although, as we see it, the giro will be organised separately from the savings bank from an administrative point of view.

I turn now to the setting up of the giro service, which is a major operation, but an operation which I believe the Post Office will be able to carry out very well. It requires the establishment of a central office, a giro clearing office, which will have to cope with hundreds of thousands of transactions during a working day. It will be a big organisation, and it will have the most modern automatic data processing service from the very beginning.

As it happens, this is one of the benefits that will have come from delay, because there will not have to be the transfer from manual operation to computer operation. Anyone who has seen the old manual methods by which the Post Office Savings Bank now handles deposits and withdrawals, and which are being computerised, will know what a blessing it is to avoid the slave labour associated with the simple operation of paperwork.

It will require a large building, and it will require the acquisition of several computers. But, as the House knows, the Post Office is one of the largest, if not the largest, operators of computers in Europe. Recently, we put in an order for £2½ million worth of computers, five more British ones, for dealing with our telephone management statistics and other associated operations. Computers are really moving into the Post Office, and we are very familiar with their use.

We estimate that about 3,000 people will be necessary to run this service, which is very much fewer than had been estimated earlier. If we are to offer a 24-hour service, it has to be near a railway centre, which will make possible the speedy transfer of giro letters from and to all parts of the country. This means that it has to be near Crewe, and indicates Merseyside for the giro centre, which will have the advantage also of conforming with the general policy of dispersing out of London and of providing regional vitality in terms of Government enterprise.

Figures have been given of £4 million to £5 million capital cost spread over five to six years, with operating costs estimated at, say, £15 million, which will be financed partly by the interest on the money we would hold while it is in transit, and partly by the charges made.

We are as confident as we can be in the circumstances, and we are assisted in this by the Treasury, whose confidence is always of a granite kind, that it will be possible to achieve a return on a giro service. To sum up, I would say that the Government are convinced that they would be offering cheap and speedy facilities to meet a real need not met by existing facilities. It is on this basis that we make this announcement to the House.

Mr. H. Hynd

Is my right hon. Friend contemplating an international link-up, as there is in Europe?

Mr. Benn

There are giro arrangements between the European countries with giros. I have not dealt with this, because it is rather outside the immediate terms of reference of the debate, but it follows that if we have a really good, modern, internal giro system, which is compatible with the banking system, and parallel with the European ones working with each other, we shall be in a position to facilitate international payments. This is one of the points that Mr. Thomson mentions in his book.

A White Paper will be published in due course which will provide further information for the House and for the country. I believe that the joint stock banks and giros together will provide the best possible joint system of money transmission for modern needs. This is many years after I would have liked to have seen it happen, but it is not too late to be of real benefit to us all.

During the debate on the Post Office, in March of this year, I described the Post Office as a "Ministry of Communications". In this sense banking is a natural part of such a Ministry because, as everybody knows, credit is a matter of information, and the passing of pennies, half pennies and £1 notes, or any physical form of cash, is an old-fashioned idea for the transmission of money. Very rich people never carry any money with them, because their reputation goes in advance. Nobody would dream of asking them for the money for the evening paper. On the other hand, as Oscar Wilde said, the poor, who need money most, have least of it.

The truth about the transmission of money is that it is largely a question of spreading the good news that a man is rich, or concealing as far as possible the bad news that he is poor. In fact, the giro offers improved facilities for spreading the news of the credit-worthiness of a man, or of an industry, or of a firm, through, in this case, electronic processes. It is in this way that the giro naturally fits into the concept that I at any rate have of the Post Office as a "Ministry of Communications".

This is a great step forward. It is a notable addition to Post Office services and to public enterprise which I should like to see meet the needs of the community. If it can do so it will boost computer technology in this country, and will lead to a demand for more computers. It will meet the sophisticated needs of a modern society, and I am glad that exactly 100 years after the Post Office Savings Bank was introduced by Mr. Gladstone we are, in this year, seeing two new developments: first, the investment allowances announced by the Chancellor of the Exchequer in his Budget speech which come within the responsibility of the Savings Bank; and, secondly, the giro itself.

I hope, therefore, that the House will endorse the Motion, so ably moved by my hon. Friend the Member for Accrington, and give us the go-ahead to get on with the job.

6.58 p.m.

Mr. Robert Cooke (Bristol, West)

For once the Postmaster-General has come to the House with optimism in his heart, and we welcome the fact that in due course we shall be seeing a great new public service, but he has not told the House when the public are to enjoy this service. We have heard that in due course there is to be a White Paper. There have been other White Papers on other subjects. The right hon. Gentleman might have been a little more frank and specific. We welcome the idea and give it our approval if it can be made to work, but we have always said that we would like to know when the public are to enjoy this service.

There has been a good deal of kite flying leakages in the Press during the last few days.

Mr. Maxwell

Nonsense.

Mr. Cooke

The hon. Gentleman says "Nonsense", but the Press has been full of it for the last week, notably the Bristol Press, which has been in close touch with the right hon. Gentleman, and the public have come to expect something as a result of this debate.

Mr. Benn

The hon. Gentleman ought to be more careful. I have spoken to no journalists whatsoever about the Government's intentions on the giro. This is a matter of great public interest. If he is implying that I anticipated the statement that I made today when speaking to any journalists, I would be grateful if he would withdraw it immediately.

Hon. Members

Withdraw.

Mr. Cooke

I am not suggesting that, and I am sorry that the right hon. Gentleman took it that way. I said that some newspapers seemed to know a good deal about it. At any rate, there has been a good deal of anticipation about the outcome of the debate. The point is that the right hon. Gentleman has not told the House and the public when we are to enjoy this new service. We are to have a White Paper. The Government approve of the service, but we do not know when we shall get it.

Mr. H. Hynd

rose in his place and claimed to move, That the Question now be put.

Question, That the Question be now put, put and agreed to.

Question put accordingly and agreed to.

Resolved, That this House would welcome the establishment of a postal giro service in the United Kingdom offering similar facilities to those given by postal giro systems in other countries.