HC Deb 24 April 1967 vol 745 cc1088-113

Order read for resuming Adjourned debate on Question[19th April], That the Bill be now read a Second time.

Question again proposed.

11.17 a.m.

Dr. Reginald Bennett (Gosport and Fareham)

When the debate was adjourned, my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) was addressing the House. I am sorry that we are not able to find out what he was about to tell us regarding the late Aneurin Bevan's views on excess capacity. However, as my hon. Friend has not been able to turn up this morning, I should like—

Sir Harry Legge-Bourke (Isle of Ely)

I have received a letter from my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) expressing his deep regret that he cannot be present this morning.

Dr. Bennett

So we shall never know.

Mr. David Webster (Weston-super-Mare)

Yes, we can know.

Dr. Bennett

Perhaps we can ask my hon. Friend the Member for Peterborough in less formal surroundings, but the House as a House will never know, unless at a later stage he chooses to enlighten us.

Speaking with a certain amount of experience of national and international data transmission links, and so on, and having financial interests in companies that use computers and international links with computers, I find the Bill extremely interesting. It holds out immense potentialities for both good and harm. The primary purposes, not only as expressed in the Bill, because the Bill expresses almost nothing, but as expressed by Ministers on several occasions, are wholly admirable. There is no doubt that it is an obviously laudable aim to have the institution of a computer network in this country.

If I may add a local point I am very pleased that the Postmaster-General intends that Portsmouth shall be the home of one of the installations that he proposes to make under the Bill. I am sure that this is a very pleasant fact locally.

The economics of the affair are enormous and will be a tremendous thing to try to amortise. To find the capital required for such a vast series of large computer installations as are intended will be bad enough, but to do so at a time of "all spend and no earn" such as we are in at present will prove an insuperable load for a Government whose financial expertise has not been noticeable so far.

We cannot be sure that the use of this computer installation and network will not represent an attempt to shut out private installations and networks. We have been told that this will not be so, but there is nothing to that effect in the Bill. Many admirable sentiments are expressed by Ministers in introducing Bills, but, because they are never expressed in the text, they are not noticeably put into effect after the Bills reach the Statute Book.

I have grave doubts, also, about the likelihood of interchangeability in the standards to be adopted. We have had the laudable statement that the network of data machinery to be installed by the Post Office will be of British origin—that is excellent—but there are already in this country many computers which are nor, of British origin. Have we any hope that the computers already installed will be able to talk to the computers which the Government will put in? Will they speak different languages or different variants of the Anglo-Saxon binary language? May we know that the common computer language used, for instance, by I.B.M. will be favoured, or shall be so narrowly nationalistic as to make our own set-up unable to converse with its American computer counterparts? It would be an enormous mistake if, in our keen nationalism, we shut out the possibility of using other computers which, after all, are quite well developed.

My doubts about the Bill are these. First, we have here, perhaps, as short a Bill as has ever been seen in the House which enables, perhaps, as big an expenditure of money and potential as has ever been proposed. It is one of these Socialist enabling measures which loose off a tremendous potential in only a few words—to be precise, a line and a half— providing services and facilities for the processing of data by computer"— giving us, as it were, the loom of a vast object seen through a fog not of words on this occasion but of lack of words. It is a most laconic Measure loosing off the biggest undertaking I have ever come across, and I suspect it deeply for that reason.

Under Socialism, who knows what is being enabled if, in good faith, we give the right to a Socialist Government to put through a Measure so simply expressed? What will the ends of this development be? If they lead us into all sorts of byways in the future, we shall probably be told that the House of Commons passed the enabling Measure years before, although the ultimate developments have nothing whatever to do with the purpose originally understood. This is a material question, at least if Socialism is to last long enough to take us into such matters.

Another aspect of the Bill which I dislike intensely is the trend towards monopoly. Already, we have a monopoly not of computers but of communications, the monopoly of all the land lines or radio links which will be available, so that no one can communicate except through the Post Office. Now, the Post Office is to go into what can only be understood as competitive business. This means that the competition will be not that of financial and operating efficiency but that which consists of having the communications and defying anyone else to use them against the Post Office.

This state of affairs gives me the deepest misgiving. It ought not to be tolerated. In exchange for these rights, the Post Office should yield on the point of permitting other data links, whether radio or land line, to be used in the setting up of independent or private computer networks throughout the country. Then we should have real competition, and we could see who did it best.

My hon. Friend the Member for Eastleigh (Mr. David Price) has already asked the question, how can it be seriously proposed to have this high grade and incredibly carefully calculated system of communications when the ordinary crude communications systems which you and I, Mr. Deputy-Speaker, attempt to use between ourselves and with others are so hopelessly disrupted by the land line system at present run by the Post Office? I say this with great feeling. If it were not for the awful inefficiencies of the Post Office communications system, we should have had in existence already, if not nationwide at least widespread, computer communications of a well advanced kind. I can vouch for one such example myself.

A company with which I am associated had a trial in connection with a computer which we wished to install. The company wishing to sell us the computer, quite properly, wanted to sell us data transmission machinery which would go with it and link our headquarters in various parts of the country. Nothing could be more attractive than such a proposal. The company staged a demonstration not only of the computer but of the data transmission machinery, and the data transmission machinery was linked to a headquarters 100 miles from London. A lot of data was fed in, was transmitted, and was processed at the other end in a simple manner, and was then to be transmitted back again, the intention being to show the speed with which the data link worked. After half the land line communications had broken down three times in the course of the few seconds needed for this vast compressed mass of data to go to the other end and be sent back again, the experi- ment was abandoned. We never bought the data transmission machinery.

I speak, therefore, with a certain amount of knowledge of the matter. With our telephone and land line links in the deplorable state they are in now, we are likely to go off at half cock in having an advanced computer network, especially such a massive network as is proposed. If computers are talking to one another, who knows when they get things wrong? How is anyone to find out whether someone pulled a plug out on the board at the wrong moment or whether there was a bit of grit under one of the contacts in the automatic units?

As things are at the moment, I do a good deal of complaining about the inefficacy of our post and communications services. I have tested the patience of the Clerks at the Table in repeatedly putting in complaints about defects in the communications services of my constituency and between the constituency and other parts of the country. If oral complaints in the House of Commons are so ineffectual, what hope will a silent computer have of getting itself heard when the land lines break down and all sorts of rubbish comes out? Plenty of telephone bills have to be annulled nowadays because of the nonsense which is sometimes recorded, for example, when someone who hardly uses the telephone except for emergencies receives a bill for hundreds of pounds. We are told that the computer "had a cold" or was "sick" that day.

I become very alarmed when it is suggested that ambitious schemes of the kind now proposed are to be started on the basis of a crazy system such as we have at present.

Another desperately serious point on which the Postmaster-General has attempted to assure us, but about which I am far from assured and shall take a good deal of assurance, is the confidentiality of secrets committed to the Post Office computer network. In addition to personal matters there is the whole question of business and trade secrets, which will be of paramount value to the companies concerned. What will happen about them, especially under a Government which sees fit to employ a "Prymaster-General"?

The build-up is very disagreeable to contemplate. We start with what may be regarded by Ministers as proper inquiries by the Income Tax authorities, and no Postmaster-General would deny them the right to probe into the computer network to find out everything they wished to know. But what will happen when the Income Tax and other tax authorities—perhaps I should say the Corporation Tax authorities—start doing such things as the Income Tax authorities recently did with Stencil No. 85? What will happen when they start claiming information to which they are not legally entitled, when they print reams of forms as alarming to the individual as other forms and people, sheep-like, fill them in? What will happen when utterly unjust inquiries are demanded of the computer system? The Postmaster-General must be a tax expert before he can tell the tax people whether they can probe into the computer system.

If we once start having probes by the tax men, what about the time a generation hence when, although Socialism has been exploded, a new generation has grown up that does not know Socialism and new attempts at nationalisation are made by the next generation of Socialist Ministers? Why should they not probe through the computer system land lines the industries they want to nationalise? We know that they never learn; they will always want to nationalise, even if they are doing precious little now in order to keep themselves popular. Probing with a view to nationalisation will be regarded by Socialist Ministers as being proper and necessary in the public interest. That blows confidentiality sky high, and from there it is only a small way to having party delving.

I have the profoundest misgivings about what will happen to people who hand over their precious secrets to the Post Office computer network, where they are at the disposal of anybody who chooses to ferret around looking for dirt. This is an absurdly broad enabling Bill. The Postmaster-General would have done much better to bring in a Bill which gave a specific description of what he intended to do in the first instance and discussed it in some detail in Parliament. I have the profoundest misgivings about giving the Bill a passage through the House.

11.34 a.m.

Mr. David Webster (Weston-super-Mare)

I congratulate my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) on his very wise remarks. He has a great knowledge of the subject, as he has of every subject about which he speaks in the House, but he has a particular knowledge in this case, and I am grateful for what he has taught me.

The Bill is horribly vague, and when a Bill is horribly vague one wants to know why, and to know the motive behind the vagueness. In addition, as far as I can see there is no Financial Resolution, which rather worries me. I wonder if this is the last we shall see of the Bill on the Floor of the House. There was no White Paper, and, therefore, it seems that the Government are concealing something. It is the function of the House to find out what they are concealing, and why they seek to do so.

I read the Postmaster-General's opening remarks because I was unable to be here last Wednesday. Although I am a layman on these subjects, they seemed somewhat Delphic. We should be wrong if we allowed the Bill to have its Second Reading, or even its Committee stage, without a very thorough answer to the questions so admirably put by my hon. Friends the Members for Eastleigh (Mr. David Price), Sheffield, Hallam (Mr. J. H. Osborn), and other hon. Members. They are important and significant matters.

The worst problem is that of competition. If the service is to be completely competitive we want an assurance that the accounts will be rendered separately from the report and accounts of the Post Office as a whole. If the Postmaster-General is to give credibility to his claim that the service will be absolutely competitive he will have no fear of publishing the accounts in absolute detail, and he will assist us at the present stage if he will assure us that that will be done, and that the accounts will be separate.

The Postmaster-General talks about the full cost being £9 million by 1971 to cover 20 large computers. We should know the return on the investment capital, the rate of amortisation and the way in which the overheads will he allocated. Those are basic essentials. As a member of the Select Committee on the Nationalised Industries who read with affection of some of the allocation of overheads in British Railways workshops, I know that without separate accounting and the rate of amortisation being made clear, there is not a hope of seeing whether the service is really competitive.

Another point concerns the efficiency of those doing the accounts to make sure that the costs are absolutely accurately allocated. With great respect to the Civil Service, we know that there is a shortage of cost officers in the public service at the present. How many cost officers will need to be recruited to allocate the costs between the different parts of the service? We have seen the problem with reference to the Ministry of Aviation, and we all know very well that the answer depends to a great extent on the ability of the public service to give a salary for those officers that is competitive with that in industry.

The increase of £9 million has come at a time when the Chancellor of the Exchequer, I am told, has assurred a backbench committee of his party that there will be a reduction, or very severe inspection, of public expenditure. Perhaps that comes under the issue of confidentiality, with which I hope to deal later. It is right to remind the House and the Postmaster-General of the question of my hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke), whether one of the reasons why the Postmaster-General had to make his statement on 6th April was that … the Post Office has over-committed itself in computer investment only to find that it cannot make full use of the investment already committed?"—[OFFICIAL REPORT, 8th April, 1967; Vol 744, c. 468.] Why are we to have this tremendous expenditure allied with a considerable increase in the Post Office's borrowing powers this year, at a time when private industry is being very severely "squozen"? That is a new word, which I hope may be recorded one day in Webster's Revised Dictionary. The point about borrowing powers is important when many firms in private industry, including many independent computer bureaux, are having great difficulty in raising finance. As my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) said, the late Aneurin Bevan had definite views on how over-capacity would be used for advancing the purposes of Socialism. We want to examine this closely.

Various assessments are given of this industry's over-capacity, some of them frighteningly above even 50 per cent., so that one wonders whether it is necessary to increase it. Is the Post Office going beyond its correct management rôle? It is essential that a nationalised industry's management role should be defined and that it should stay within it. When politicians interfere with an industry, there is bound to be a political directive which deflects it from its management role. I suspect that that is happening, concealed behind this small Bill.

Who will allocate time, at a peak period of demand, and say who will get the line at that time and the use of the computer? Who will adjudicate that justice is being done between the public and the private sector? There are many occasions when the public sector must get through important messages and data, but, in justice to the other sector, if we are to operate a mixed economy, there must be adequate adjudication of priority.

This £9 million will create an increased patronage in the industry. It makes the computer manufacturer more dependent on the nationalised industry, and there comes a time when this begins to have dangerous implications throughout industry. How much of the money will be spent on machines—we are told that there is already a surplus—and how much on the "software", the processing side? Unless we know, it is impossible for us to judge whether the basic management tenets are being properly applied.

On the "little island" basis which we have, I fear, particularly under the present Government, what special arrangements will be made with the O.E.C.D. Computer Research Centre at Ispra, in Italy? This is a valuable form of data processing which could be most helpful. If we are to go into a co-ordinated framework, a national computer grid, the House wants to know further how it will be done.

We must remind the right hon. Gentleman that his function is not to produce the computers and arrange the varying controls of our economy and society which might eventually result, but to provide the line and I wish that he would stick to this and leave the main computer services to other people who do it on a proven commercial basis.

One of my greater worries is confidentiality. My hon. Friend the Member for Gosport and Fareham (Dr. Bennett) referred to Stencil 85. The trouble is that the House puts out so many powers that those in the Departments often find it difficult to know when they are exceeding a power. With the most innocent motives, it is possible to issue a document like Stencil 85 without Parliamentary authority. Whether it is necessary or not—I do not know—it is still an infringement of the liberty of the individual. What frightened me more than the Stencil itself was that when it was withdrawn the Financial Secretary implied that this was the correct thing to do and that this approach was the right one for the conduct of Government business.

This is terrifying. We have today what we think is a small Bill, but I wonder how far the implications will go, not only o getting power over discussions in our community. The question of allowing it, with the Financial Secretary's attitude towards confidentiality, also makes me very nervous. The House would do well to reconsider the Bill thoroughly before giving it a Second Reading.

11.45 a.m.

Mr. David Howell (Guildford)

As several hon. Members have said, the Bill has profound implications, and that will be agreed whether we are for it or against it. I therefore share the amazement of my hon. Friends that a Measure which may affect the fabric of our society in a few years' time should have been shoved away as non-controversial last Wednesday. I am grateful that we have this further opportunity to discuss it, as I could not attend last Wednesday. However, even now, this is not exactly "peak listening hour".

Since last Wednesday, a comment on this matter has appeared which reads: Even among those who most welcome the scheme there ought to be sufficient misgivings to make them wish to see it debated—that is to say, contested. If Parliament is trying to recapture some authority from the technocrats, it should not simply rubber-stamp the present proposals. That comment appeared in the New Statesman, written by Mr. Nigel Calder, who went on to warn against the almost inevitable dangers of a monopoly in this situation.

At the end of his excellent article, he used the striking phrase, "the infrastructure of tyranny". Those are strong words, particularly from the New Statesman. I believe that Mr. Calder used them because he understands the very profound implications of this, the tremendous consequences for the shape of our lives in a few years' time. Does the Postmaster-General also accept the full implications? In view of the absence of a White Paper and the tucking away of this enabling Measure among non-controversial business, the evidence is that he does not.

My second question concerns the capital financing. Obviously, vast amounts of capital will be required as the scheme expands and we move into the era of the national computer service, the national grid of which the right hon. Gentleman spoke. Will all the capital come from the State? If it does, is this the way to ensure that the initiative of private enterprise and the new techniques and flexible thinking which will be required are introduced? There would be immense gains and not losses by making sure that, far from confining the whole of the financing to the State, ways of introducing private capital were found in future.

My third question concerns the rule of privacy. This cannot be met by a shake of the head, as it is of fundamental importance. When we are moving into an era in which the Government take over the whole national network of communication in this form, the Government themselves are bound to lay down carefully and precisely the rules of privacy and those which will cover the allocation of time and the access to information by bodies and firms—

Mr. Tam Dalyell (West Lothian)

Does the hon. Gentleman think that there should be a national network? If the Government do not run it, who should?

Mr. Howell

I was about to say that I am convinced that this is an exciting and important idea. Certainly, there should be a national computer service. What I am saying is that there is every possibility of introducing both public power and private resources into its running. In other countries, it is possible to run national network not exclusively on the basis of nationalised industries. It is possible, using imagination, to think of many agencies combining public power and private resources. I am sure that the hon. Gentleman has studied institutions in Italy and elsewhere—which combine private efficiency and public power.

The very importance of the Bill means that it is one which, in the words of Mr. Calder, Parliament should not "rubber stamp". It raises fundamental problems about the position of the State versus the people. It is an immensely exciting idea, but gives hon. Members a good opportunity to serve notice that we do not accept complete State ownership in this or other nationalised spheres as the perfect solution. We believe that there will be, in the future, ways in which we can reintroduce private enterprise into sectors of this kind.

We intend to pursue these ideas for three reasons—so that the impetus of the private sector may be utilised and good service given as, unfortunately, in too many parts of the public sector it is not; so that ownership may be genuinely spread and not spuriously claimed by the Government on behalf of the people when nothing of the sort exists; and, finally, so that there may be no State monopoly of the control or ownership of the communications system which will bind our society together a few years hence. These are questions and worries that I feel that both sides of the House should share.

11.50 a.m.

Sir Harry Legge-Bourke (Isle of Ely)

The Postmaster-General, whom we are very glad to see present this morning, must be a little surprised at the way in which this debate has gone. When we saw this business put down on the Order Paper for a morning sitting we could only assume that the Government imagined that the Bill would be a non-controversial exercise and that a good deal of it would be dealt with virtually "on the nod".

As it is, I believe that both the right hon. Gentleman and the Joint Parliamentary Secretary to the Ministry of Technology will agree that during two mornings we have had an extremely interesting and thoughtful debate. It is, how- ever, regrettable that as a result of the procedure laid down for morning sittings we have had this debate cut in half, with the result that some hon. Members found it possible to be here on Wednesday morning but not on Monday morning.

As a result, some of those who have already taken part in the debate will not be able to hear the Joint Parliamentary Secretary's reply. I hope that by now we have established that a Bill of this importance should not be taken during morning sittings.

In the light of our debate, it might be most convenient if I were now to try to confine my remarks under five headings: first, the basic principles underlying the Bill; secondly, the nature of the Bill—what it does; third, the financial aspects; fourth, the merits—or perhaps might say the demerits—of a national computer grid fifth, the special position of the Post Office and the most appropriate role for it to play in the computer field.

I begin by speaking about the principles on which the Bill is based. Whether we believe that this is a good or a bad Bill, we cannot avoid facing the fact that it contains powers to enable yet another State-controlled insitution to diversify its activities into a field into which private enterprise is already tending to move. This at once makes the Bill of considerable importance to the relative party philosophies. In other words, we would be making a mistake if we assumed that there was not a very deep party issue here.

Although I do not propose to elaborate that argument now, we must recognise that what we are here doing is to give the Post Office power to move into a field which is not nearly as automatically a field of monopoly as is the case with all the other activities undertaken by the Post Office under the Post Office Act, 1961, which the Bill amends. This means that if we are to give the Post Office—or, indeed, any other nationalised undertaking—the right to diversify into new fields where private enterprise is already establishing itself, we should consider simultaneously giving power to private enterprise to move in to what has been a monopolistic field, hitherto only occupied by State institutions.

That is the great philosophical issue between the parties, and it is something that we have to watch over the years. As the Parliamentary Secretary knows, in other capacities he and I have considered diversification in the iron and steel industry. I do not now propose to elaborate on the arguments there deployed, but this is the fundamental issue between the parties and, because of this, it was only asking for trouble to arrange for the Bill to be brought before the House at a morning sitting.

We are, naturally, grateful to the Postmaster-General for his preliminary statement explaining what the Bill is about, and may I say, on behalf of my hon. Friend the Member for Eastleigh (Mr. David Price)—who apologises very sincerely because he cannot be here this morning—that we accept very readily the right hon. Gentleman's offer of private discussion on the whole question of security and line tapping.

The debate has shown that the anxieties about security are not only those which the right hon. Gentleman had in mind. Outside people tapping lines is one thing, and needs very careful supervision, but what has most concerned my hon. Friends during the debate has been the possibility of the State learning too much that it might misuse, and not giving that security to the users of the proposed service that customers would normally be entitled to expect. That is a different matter, and one that can be discussed when the talks take place.

Let me now deal with what the Bill does—its nature. The Postmaster-General very clearly set this out in moving the Second Reading on 19th April last. As will be seen from col. 502 of the OFFICIAL REPORT, the list contains provision of computer time, provision of data preparation and input facilities, systems analysis service, programming service, facilities for computer to "talk" to computer, "desktop" computer facilities for individuals, and facilities for the establishment of "data banks". These services are all extremely important.

On 6th April, the Postmaster-General said: I am sure that this new service would meet a widespread need, especially among the smaller business and organisations which are unlikely to be able to justify computers of their own."—[OFFICIAL REPORT, 6th April, 1967; Vol. 744, c. 466.] Earlier, he had declared that computer usage in this country is less than it should be. We all agree with that statement, but let the right hon. Gentleman "gang" a little warily there. It is very easy for the seller or provider of a service to say that the service is being insufficiently used, but the user or purchaser of that service may have very different views about it.

This is becoming very clear in the collision of opinion that is developing between the American-based and the British-based computer firms. We know that the Americans tend to think big in the size of the computers they install, whereas in this country we tend to the more guarded view that there is, perhaps, a place for smaller computers in greater numbers than have been established in America. Obviously, it will pay the American computer manufacturer to persuade British users that the big computers are the right things to use. Although we too are moving towards the use of big computers, we must be a little wary before accepting the Government's statement that our computer usage is much less than it should be.

That a potential increase is there, no one would deny, but what is the need today? The best figures I have been able to get show that in 1958 we had about 100 installations, and about 1,650 installations by the end of last year. That is an average increase of about 190 computer installations a year. There are those who believe, as my hon. Friend the Member for Eastleigh said, that we shall have to step up this increase very considerably above the working party's estimation. I am told that the departmental inquiry into potential increase never consulted any of the major computer manufacturers. It seems astonishing not to have done that. As far as one can make out, there is potential for an additional 2,000 by 1970 which are likely to be wanted over and above the 3,000 referred to by that working party.

Then I must follow up the question which I put to the right hon. Gentleman when he made his first statement on 6th April. On that occasion, I asked him about the spare capacity in the Post Office's own computers. The implication of his answer was that the reason why he was introducing the Bill was not to make sure that spare capacity was fully taken up. We know now from the answer which he gave to my hon. Friend the Member for Worthing (Mr. Higgins), on 13th April, that the total load at present on the six English Electric LEO 326s, the two Elliott 803s, the one Elliott 503, the two National Elliott 405s and the one I.C.T.1201 owned by the Post Office means that only 50 per cent. of their capacity is being used.

That must dictate the question: what were the original assessments both as to usage and as to time scale on the 12 computers already owned by the Post Office, and what is the estimated usage of the six which are now on order and the additional ones which, according to the Postmaster-General, will be purchased if the Bill goes through?

I can understand that there is an imponderable here. The unknown factor is bound to be considerable when investing in computery. But there must be some estimate of the likely time when these computers will become so fully used that there is no spare capacity left, and we ought to have some idea of what is in the minds of the Government when placing these very considerable orders.

We know that the present computers owned by the Post Office have cost £4 million. We are told by the Postmaster-General that the new data service, including the training and bringing into employment of the systems analysts and data processors, will cost about £9 million in addition. However, we should like to know the breakdown of that £9 million and how much of it is going into hardware and how much into software.

Too many people imagine that all that is required for a computer is an enormous box with a lot of wires inside it, and that that is the end of it. However, there are such things as peripherals, as well as the "memory", and the software will probably involve a bigger expenditure than the initial machine. I think that we are entitled to ask for the breakdown of all this.

I have been looking at the financial aspects of the Bill, and it might be worth while to remind the House that it refers to the Post Office Act, 1961, Section 1(3,b) of which sets out the following functions of the Postmaster-General:

  1. "(i) postal matters,
  2. (ii) the remitting of money,
  3. (iii) telegraphs, telephones and … wireless telegraphy, and
  4. (iv) activities carried on by him as an agent (whether for a government department or for any other person whatsoever) ".
Clause 1 of the Bill adds to that list, (v) the provision of services and facilities for the processing of data by computer. Under Section 8 of the 1961 Act, the Postmaster-General is able to borrow up to £30 million to meet his obligations and perform his functions. Under Section 10, the aggregate of principal of advances made by the Treasury plus interest on outstanding liabilities shall not exceed £880 million or, with special permission from the House of Commons, £960 million.

Command Paper 3218, published by the Post Office last month, deals with the prospects of the Post Office over the next year or so. I find it extraordinary that there is no mention in that White Paper of this proposed new service. Nor is there any mention of it in the other White Paper, also published last month, dealing with the proposed reorganisation of the Post Office. The Postmaster-General was rather quick off the mark when my hon. Friend the Member for Eastleigh got on to the financial side of the Bill, and interrupted my hon. Friend to say that, in due course, the Post Office will be reorganised to be an independent Corporation. I want now to ask the right hon. Gentleman one or two questions about the consequences of that.

As we understand this White Paper, telecommunications services alone involved £242 million for investment in fixed assets last year. This year, it is to be £294 million, of which £161 million will be borrowed. The combined postal and telecommunications borrowing in 1965–66 was £95 million. Last year it was £139 million, and this year it will be £178 million. No mention is made of whether that last figure will include the £9 million which the Postmaster-General mentioned during the debate. I must assume that it will be included, because there is no financial Clause in the Bill, nor is there a financial Resolution on the Order Paper. I take it, therefore, that all the expenditure visualised under the Bill is covered by legislation which is on the Statute Book already. Can the Joint Parliamentary Secretary tell us exactly where this £9 million fits in the finances set out in the White Paper?

As my hon. Friend the Member for Weston-super-Mare (Mr. Webster) said, one has to recognise, too, that the position of the private bureaux in terms of capital provision is already difficult. When one sees the enormous borrowing powers of the Post Office under the 1961 Act, one realises that the Post Office is in a commanding position with those great borrowing powers.

I notice that, in the course of the debate, we became involved in the Giro system. I do not propose to elaborate on that a great deal, but it would help if the hon. Gentleman could say to what extent we shall see the cost of the Giro system being wrapped up in the £9 million which we are spending in the Post Office on computery. We do not know whether it is a separate expenditure, and we are entitled to know whether we shall see the different expenditures under these headings clearly set out.

I hope that what I am saying will not be taker to be fractious criticism of the work which the Post Office has done. We all recognise that the "Datel" service which is already established has many industrial possibilities that will be of great value and importance to the nation. The question revolves round whether or not we think that it should only be done by the State.

My hon. Friend the Member for Eastleigh asked about the Discounted Cash Flow technique which the N.E.D.C. has been thumping so hard as being desirable for Government Departments to adopt for the eventual writing off of the total capital cost of these computers. It is a slightly complicated process, but if hon. Members wish to illuminate their minds on the subject, there is an admirable pamphlet published by N.E.D.C. dealing with investment procedures which explains fully what the process involves. The important thing is that the House should in future he able to see the results of operating this process and we should know what rate of interest—7 per cent. or 8 per cent. we just do not know—should be adopted.

There is one aspect which is of some importance in the context of the Bill. As I understand, the Post Office will not be paying taxation under its present dispensation, whereas in the D.C.F. calculation it is one of the factors to be brought in. Under the new dispensation, when the Post Office becomes an independent corporation, presumably it will be paying taxation. We would like to be told whether this is so, because it must affect the D.C.F. factor.

I do not wish unduly to prolong my remarks, but I must say a few words about the merits of a national computer grid. On 19th September last year my hon. Friend the Member for Horsham (Mr. Hordern) wrote in The Times an article entitled "Catching up with the computer revolution". In it, he said: There is a real and urgent need to create a national grid based on a central computer system. Firms could plug into the system in the same way as they do with the telephone. Up-to-date information could be made available to them, and to the Government, on which both could base their decisions. That caused an explosion from the British computer manufacturers, not least from Sir Leon Bagrit, the Chairman of Elliot Automation Ltd. who, in a letter published on 22nd September last, said, inter alia: Methods of applying computers advantageously are still in an early stage both in the United States and in the United Kingdom. In automation, be it industrial, scientific, or social, problems have to be solved using whatever methods and machines are most suitable and not from the point of view of what an overseas exporter of computers chooses to sell as his most profitable 'line'.' Mr. Basil de Ferranti, a former Member of Parliament, now Managing-Director of I.C.T., also warned us about the experience of two large American companies which had great difficulty with large computers, and Mr. W. E. Scott, the Managing-Director of English Electric-Leo-Marconi Computers proclaimed that the English Electric System, which the Post Office has taken up, known as the System 4–75 computer, had not been introduced by the time the Flowers Committee made its Report on the installation of big computers. He seemed to be arguing that the British industry had done a wonderful job against very keen American competition without resort to these vast computers.

In the Electronics Weekly of 29th March this year it is reported that I.B.M. have stopped the production of 360–90s and I know that another big computer, the C.D.C. 6600 is also running into difficulties. There was a time when the view put forward by Mr. Herb Grosch was seldom questioned. This was that as the price of a computer doubled so the work load it would handle went up four times. This theory is now being questioned very closely. Dr. Donald Michie, of the Department of Machine Intelligence and Perception at Edinburgh University, is leading a team to produce a computer for about £60,000, as opposed to one costing several hundred thousand pounds, such a machine being suitable for almost any medical research or bio-medical laboratories. We are still in a state of flux, and I think that it is dangerous to plump for one type only. I know that the hon. Gentleman is anxious about the time. So am I, but I must say a word about the rôle of the Post Office in the computer field.

I suggest that the rôle for the Post Office at this stage is to do what it can to help all the other Government Departments which have computers to make sure that there is as much rationalisation as possible and the minimum of spare capacity, and that until we are certain that the Government's own employment of computers has been perfected to the limits possible, the Post Office ought to be very careful before it starts moving into a field where the independent bureau is already establishing itself. It may be that the Post Office will have to move in in the end, but it is a pity that we did not have a White Paper and a full debate on the whole principle. We know from an article by Mr. J. J. Adler of the G.P.O. in the Special Supplement of the Financial Times, in September, 1965, that the Post Office has been thinking along the lines of a national grid. It may be that one day we shall have to have one run by the Post Office, but we do not know at this stage whether this is the right answer. I think that every speech in this debate has shown that hon. Members are uncertain. In view of the way the debate had gone I feel that the only thing the Opposition ought to do is vote against the Bill. I do not know whether this is what we shall do eventually, but I am waiting with great interest to hear what the hon. Gentleman has to say, and I am sorry to have left him only a quarter of an hour in which to say it.

12.16 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Jeremy Bray)

I agree with the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) that this has been a valuable debate, and one which will not be the last on this subject. A number of important questions have been raised, and I shall do my best to reply to them.

The case for a National Data Processing Service rests on two considerations. First, the economies of scale, and, secondly, the need for inter-communication between sources and users of information and between data processing systems. One can ask how far these considerations have been reflected in the experience of the Post Office to date. The Post Office has always operated on the principle of buying large computers on a cost-performance basis and loading them up out of a continuing stream of new applications, rather than buying an ad hoc computer for each new application as it comes along.

We can look at the experience of the Post Office to see how far this has paid off. The hon. Member for Eastleigh (Mr. David Price) and many others asked for the economic justification for the use of computers in the Post Office. In common with other public investment projects, every Post Office computer project is expected to show at least an 8 per cent. rate on a D.C.F. basis. In calculating this the costs of planning, conversion and all the capital and running costs of computer time allocated to the project on an hourly basis are taken into account.

Computers are written off normally over 10 years. It may be said that in a field where obsolescence is as rapid as it is with computers 10 years is an unrealistic period. But this is not necessarily the case. The Post Office has two fully loaded computers which have run for eight years and which, although undoubtedly obsolescent, so that they would never be bought today, are still making rather better than the originally calculated return. The Post Office would not, of course, rule out replacing computers performing a given task in less than 10 years, but if it were to do so it would want to establish that it was cheaper to do so taking into account all the costs involved, including the changeover costs, and also including consideration of the fact that the personnel needed to effect the changeover might be more profitably employed on a new application rather than on revamping an old one.

For the future, the Post Office expects fully to load with its own work 20 large computers costing £0.6 million each, or of that rough scale, and connected by data links by 1971. National data processing service or not, that network will exist. My right hon. Friend mentioned that at present the load on Post Office computers is about 50 per cent. of capacity. This is no more than usual practice in a large data processing organisation. Provision has to be made, first, for the build-up of future work on existing machines. It is expected that with currently planned applications within the Post Office the full existing capacity will be taken up within 18 months if no further provision is made.

It is necessary always to provide capacity to cover the risk of breakdowns—to cover the fact that the loading is uneven and to enable it to meet a certain amount of peak demand and, finally, to provide for uncertainty—in planning future applications—in that one can never tell exactly how long a programme will take to run on particular applications, if only because we do not know the error rates of data fed into the new application.

This is a quite typical situation and the Post Office, in line with other major bureaux and private users, has established a satisfactory level of capacity working. Opening the network to all corners means that the non-Post Office load can be built up almost without risk, because anything which might be done to cater for expected non-Post Office users could be put to Post Office use if, in the event, expected demand from the outside did not materialise.

Hon. Members have asked for a breakdown of the £9 million to be spent over the next five years, as quoted by my right hon. Friend. This is necessarily a very provisional estimate of the sum that could be spent on the early stages of the development of the national data processing service. It includes £3 million for staff over the next five years and £6 million for equipment. This is in addi- tion to the 20 large computers which are required for the Post Office network up to 1971. In other terms, this £9 million would represent an experienced staff of 500 systems analysts and programmers and ten large computers which, added to the Post Office's own requirement, would mean a network of 30 large machines with 1,000 software staff by 1971.

I now take up the point made by my hon. Friend the Member for Bristol, North-East (Mr. Dobson). The Postmaster-General is obliged to my hon. Friend for his reference to the possibilities of recruiting and training within the Post Office itself. This is our present policy, and of the 450 people already employed in the Post Office on data processing work, all except a small handful have been trained within the Post Office. The national data processing service will require experts in particular fields in which it operates and some, no doubt, will be recruited from outside while others will be trained from staff recruited from within the Post Office.

Many hon. Members have asked about the keeping of accounts. The national data processing service will be set up separately, on a separate accounting basis, and will have its own accounts, which will be published. It will serve some of the biggest single users of computers in the country, including the other Post Office Departments. As my right hon. Friend has said, the scale of charges could well be the same for all users, be they Government Departments or commercial users. What now, for convenience, is called spare Post Office capacity —it is only temporarily unoccupied, in the building up of the load, as a safety margin—will become national data processing capacity along with the existing Post Office capacity, and will be sold at standard rates.

I have been asked questions about priority in the use of time of computers. It is the intention that the question will be regulated by good old commercial principles, with extra charges for peak hour use and for priorities. There will be different degrees of priority, and the rates will be different for each degree of priority. The "mix" of the load at a particular installation will take account of the contractual obligations, and the network allows an emergency to be much better handled than in a single bureau. There will be the same priorities in the handling of an emergency as in the handling of an ordinary operation.

Then there is the question of finance. The borrowing powers of the Post Office cover the financial requirements of the national data processing service, which are small in relation to the total Post Office requirements for the next five years. The tax position of the Post Office will be the same as that of any other corporation. At present, it makes a payment in lieu of tax, but when separately set up as a corporation the position will be different. It will be liable to Corporation Tax in the same way as any other corporation. It will receive investment grants and contributions on the same basis, and be liable to Selective Employment Tax in respect of any activity in which it competes with other S.E.T. payers.

Then comes the question of the effect on private bureaux. It is significant that since my right hon. Friend's statement to the House on 6th April the Post Office has had many inquiries from bureaux, all of which welcome my right hon. Friend's initiative and would like to explore the larger possibilities which the national data processing service seems to offer their own business.

The suggestion has been made that the Post Office should concentrate on telecommunications. The first priority is to make good the current deficiencies in the telecommunications services arising from the very rapid and welcome growth in demand, which hon. Members opposite failed to foresee and to provide for in time. My right hon. Friend is doing this to the limit of the capacity of the supplying industries—for example, as many trunk circuits will be added over the next five years as have been added since the turn of the century. Provided the supplying industries can produce the plant, expansion on this scale will remove the problem of congestion and waiting lists during the next two or three years. Now is the time to prepare for new developments.

The interesting article referred to by the hon. Member for Guildford (Mr. David Howell), by Mr. Nigel Calder, suggested that in five years' time people would be complaining about the lack of provision of computer capacity in the national data processing service to enable people to complete their requirements and be able to compete with others already using the service. We are foreseeing future developments in the right way.

The suggestion has been made that the Post Office should stick to telecommunications only. I welcome the enthusiasm of the hon. Member for Eastleigh for digital transmission systems. Undoubtedly, this is the direction of future development, but in such a system as this it is difficult to say where the computer ends and the transmission line begins. With the digital system the message is packaged and sent out by the computer. It then passes to another computer and finally to the end terminal, without having established a clear line to the other terminal, possibly picking up information from a data bank on the way. Where does the computer end and the line begin? It seems that a national data processing service is technically the right answer.

Certainly, on the question of standards, which has been emphasised by many hon. Members, the national data processing service itself can be a major influence towards the achievement of proper standards, which are so important.

On the question of confidentiality, my right hon. Friend assured the House that the Post Office will maintain the same deserved reputation concerning the strictest observance of the confidentiality of information entrusted to it.

On wider social questions, there are considerable uncertainties as to what they are. It is not a question of locking up information, but of providing the right kind of access to it. No doubt many hon. Members have had constituents who have wanted to know what information Government Departments have about themselves, and have found this has been denied them. That is one reason why we have the Parliamentary Commissioner. The condition upon which God has given liberty to man is eternal vigilance. I trust that the House will continue to exercise this vigilance not only in the discussion of the future stages of the Bill, but also in the surveillance of the system as it is discussed and developed technically.

Hon. Members have mentioned the Select Committee on Science and Technology. This may well be a useful channel. I hope that hon. Members will agree that the Bill, with its many interesting possibilities, should be given a Second Reading.

12.28 p.m.

Mr. Marcus Kimball (Gainsborough)

After what amounts to virtually two long days of debate, the hon. Member has not dealt with the problem of Hull, which is still allowed to have a private enterprise telephone exchange. Will the eventual basic computer services be available to subscribers to a telephone exchange in Hull?

The right hon. Gentleman has also failed to deal with the points raised by my hon. Friend for the Isle of Ely (Sir H. Legge-Bourke) about the purchase of Post Office equipment. I understand that there is a ruling that—

It being half-past Twelve o'clock, the debate stood adjourned.

Debate to be resumed Tomorrow.