POST OFFICE

HC Deb 12 March 1968 vol 760 cc1307-33

10.0 p.m.

The Postmaster-General (Mr. Edward Short)

I beg to move, That the Postmaster-General be authorised, as provided for in section 5 of the Post Office Act 1961, to make payments out of the Post Office Fund in the financial year ending with the 31st March. 1969. Time is very limited, so I do not propose to make a long speech. My right hon. Friend the Leader of the House has indicated that he will be willing to give time, later on, for a longer debate covering the Select Committee's report, the Report and Accounts, the forecast White Paper and the National Board for Prices and Incomes Report. Hon. and right hon. Gentlemen will have seen the White Paper on Post Office Prospects 1968–69 setting out the facts. It will not be possible for me to cover all the many activities of the Post Office, so I propose to confine myself to one or two themes.

I am sure that the House will expect me to say something about the postponement of the Bill to convert the Post Office into a public corporation, announced by the Leader of the House on 1st February. This is a personal disappointment, but it was necessary and the delay to vesting day, which was originally planned for 1st April, 1969, will not be over-long. The Bill will be introduced at the beginning of the next Session. I know that some disquiet has been caused among Post Office staff by this postponement. A number of my hon. Friends who have connections with the staff interests have been good enough to tell me about this, and I know from the staff themselves. Indeed, only two or three hours ago, I talked to a group of staff representatives in Swansea.

I should like to take this opportunity of reiterating that the delay to vesting day will not be over-long. It will simply be a matter of a few months. I should also like to draw attention again to the undertakings given to the Staff on the position up to vesting day, about conditions of service, security of tenure, and superannuation. These are set out in Cmnd. 3233—Reorganisation of the Post Office. These undertakings have been made known to all Post Office staff and we have been having long and fruitful conversations with them.

It is true that many of these discussions have been on a confidential basis with staff representatives. This has been inevitable, but I am hopeful that negotiations on a good many matters can be brought to the stage where unions can debate them openly at their annual conference this summer. Certainly this should be so with superannuation. The full details will be available later this month.

We have made excellent progress with the job of reorganising the managerial structure of the Post Office, which I announced last year. The separation of posts and telecommunications into two independently managed businesses is now effective, apart from one or two details. I should like to pay tribute to the cooperation of the staff associations in getting this done so quickly and smoothly. The biggest managerial revolution the Post Office has ever had has been carried out in the past 12 months. I am sure that nothing but good can come from the sharper definition of managerial responsibility which follows from the untwining of these two businesses.

By any standards they are very large industries. One important result has been a drive to make management and staff at all levels more—to use the fashionable jargon—consumer-orientated. We are also examining the size of our management force. There is no doubt that the Post Office is under-managed in comparison with other industries. We can only cope adequately with the growth of business and the rate of change of its technology and ensure higher productivity if the strength of the management is increased.

I have been looking back at the reports which have been given to the House by me and my predecessors in this office in previous years. Looking back on them, I do not think that the postal side of our business has had the measure of attention which it deserves or that given to its perhaps more glamorous partner, the telecommunications service, and that is not altogether surprising. There are no spectacular increases in traffic on the postal side, and there are no spectacular technological advances. The mechanisation of the postal side of our business is a long, steady hard slog. It is still a labour intensive industry with all the problems that that brings, and one of them has been to hold standards of service without incurring too large an increase in costs. In an industry in which some 70 per cent. of costs are for labour, this has been by no means easy.

As an illustration of What I mean, I quote the fact that we have had to deliver letters to 300,000 new houses last year. Since everyone expects letters to be delivered at more or less the same time, it is inevitable that we need many more postmen to do it, even if, as I shall show in a moment, we make savings elsewhere.

There has been an achievement in 1967 of which I am proud, and I pay tribute to the managers and staff who have brought it about. In 1967, we delivered 93 per cent. of fully-paid letters by the next working day after posting, compared with 92 per cent. in 1966. Hon. Members may say that this is a lot of fuss about 1 per cent., but that 1 per cent. means that we have given improved service to 60 million letters during the last year. We aim to do better than that in 1968, but I do not offer any forecasts.

Further improvement on this high figure will be increasingly difficult to attain, because there will always be some letters posted late on one day which we cannot deliver in remote places the next day and, of course, there are always many letters incorrectly addressed which will not be delivered next morning. So it will be very difficult to improve on the 93 per cent. figure. However, we hope to do so.

A few moments ago, I mentioned mechanisation. After some disappointments, I am hopeful that we are at last entering an era of mechanisation of all the processes of handling mail in our main sorting offices. These disappointments have arisen not through any lack of application on the part of those responsible for designing the machines—in this sphere of activity, we really lead the world—but, rather, from the intractable nature of the problem itself. Our fully automatic letter sorting office at Norwich has worked well, and equipment for the full mechanisation of three more large offices will be installed this year. Partial mechanisation—that is, using machines to carry out the first phases of the sorting process—has been carried out in six offices, and we will soon be putting it into another 16. We shall spend more than twice as much on plant in 1968–69 than in the current year.

Coupled with this investment in mechanisation of our postal business, we are intensifying our efforts to improve productivity in the use of our manpower both by research into better methods and by improved management controls, because, of course, there will always be parts of the postal service which can never be mechanised. In spite of having to employ several hundred postmen for delivery to new housing, we expect to achieve an improvement this year equivalent to the saving of about 1,000 men. In 1968–69, there should be a rather greater improvement as the full year effect of this year's measures are felt.

We are by no means confining our efforts to securing savings through changes applied throughout the country. Much of our expenditure, particularly in sorting offices, is related to the functions and circumstances of the individual office. The phased programme under which we are reviewing the operations of all our large sorting offices in turn, systematically and analytically, is, as we hoped, showing ways and means of making many improvements. Though most of these are individually fairly small in money terms, those implemented already represent in aggregate a continuing annual cost reduction of about one-third of a million pounds.

Bearing in mind that the study programme is as yet no more than one-third completed, and that consultation with the staff on the changes proposed and the actual introduction of new arrangements naturally takes a little time after each study is made, I am confident of a really significant overall result by the time this programme is finally completed.

Perhaps I could turn to stamps for a moment, because stamps are a subject which interest many hon. Gentlemen. A feature of 1967 was the introduction of the new definitive series of stamps. Here I believe we have achieved probably the best British stamp ever produced. Stamp sales at the Philatelic Bureau in Edinburgh and at the philatelic counter in London between them contributed £1¼ million to Post Office revenue. We intend to improve further on this performance. We are making special efforts to increase our sales overseas, and in September of last year we opened a philatelic depôt in New York.

I turn now to the new Giro service, the opening of which this year will be a major step forward in modernising the money transfer services of this country. The arrangements for inaugurating the service are progressing satisfactorily and on schedule.

A good deal of the building at the Giro centre at Bootle is nearing completion, and the installation of the specialised equipment has already begun. It is an immense undertaking to establish the service in a little over three years from the decision to go ahead.

A small number of staff moved to Bootle last October and they will be followed by the majority of the planning staff in April, 1968. The recruitment of local staff has already started and will be accelerated from now on. Some 2,000 Merseysiders will be employed by the end of this year, and this will rise to 3,500 by the end of next year.

Interest in the services that Giro will offer has been widespread, particularly recently after an autumn publicity campaign in the trade Press. We are in close contact with many large organisations in order to ensure that their accounting procedures are integrated to the maximum extent possible with Giro processes.

I have no doubt that Giro will provide a very useful service to those many people who do not have bank accounts. Market surveys have shown that Giro is likely to prove very popular with the general public. I am confident that this new service is going to be a great success.

I should now like to say something about our largest business—telecommunications. First, capital investment. As the White Paper says, the Post Office's capital programme over the next five years will probably cost about £2,000 million. The greater part of this will be for the telecommunications services. We shall be spending about £290 million on them in the current financial year, and we plan to spend over £330 million next year. These are enormous sums of money. They represent by far the largest capital programme for the telecommunications service any Government has entered into. This money is needed to improve the service given to our present customers, as well as to provide for new ones.

I shall not weary the House with a lot of figures, but I should just like to give one or two examples of what this programme means when translated into its effect on the customer. We are planning to increase the size of the telecommunications system of Britain by 50 per cent. in the five years to March, 1972. By next March 98 per cent. of our customers will be served by automatic exchanges and 85 per cent. of them will have S.T.D.; that is, they will be able to dial their trunk calls.

In the coming year we expect to complete 800 new exchanges, or extensions to existing exchanges, and we shall put 12,000 more trunk lines into the system. We shall meet 1.3 million orders for telephones. My hon. Friends who represent constituencies in the development areas will be glad to learn that most of the manufacturing work to which this rapid expansion of the programme gives rise, will take place in factories in the development areas. In 1968–69, 73 per cent. of our telephones will be made there, and by the end of the following year almost all of them will be made in development areas, compared with 45 per cent. in 1966–67. The big expansion in the production of exchange equipment has taken place almost entirely in development areas, and 70 per cent. of it is now made there. The Post Office, through its purchasing power, is thus playing its part in correcting the regional imbalance which has plagued the British economy for far too long.

Of course, spending these vast sums of public money as we are, we have a duty to see that our organisation of the service is as efficient as we can make it. In this context I remind the House that last year the Post Office was thoroughly investigated by the Select Committee on Nationalised Industries, and that we did not come out too badly. I do not think that any public service has been investigated so much as the Post Office has over the last two or three years.

We are making a great drive to achieve greater productivity. Let me highlight just one example. As I have said, we aim to increase the number of telephones by 50 per cent. in the five years to March, 1972, but, by improved methods of work, we plan to do this with no increase in manpower. I should like to pay a big tribute to the management and the staff associations who have co-operated to the full in these plans. This is a success story in productivity which deserves to be more widely known than it is.

As an example of the drive towards customer-orientation, to which I referred earlier, let me tell the House about the appointment service which we have introduced in parts of the country, and which have proved very popular. Under this service, customers can make an appointment for a telephone to be installed on a particular morning or afternoon. As a result, about 30 per cent. of our orders are now handled by appointment. Almost half of these are completed within a week of receiving the order, and three-quarters within two weeks of application. We failed to provide a service on the agreed day in only 6 per cent. of cases. We shall be expanding this scheme throughout the country as equipment becomes available. At present it operates for relatively simple installations. We shall introduce a similar scheme for more complex business installations experimentally later in the year.

Where plant and equipment are surplus, and I accept that this is not the situation in some parts of the country, we have been pushing the sales of telecommunications services, such as telex and special instruments. Already this is producing additional profits, and we hope to do a good deal more in the coming year.

Finally, I know that the House will expect me to say something about Post Office finances. The White Paper on prospects sets out the problems, and, as the House knows, Post Office charges were referred to the National Board for Prices and Incomes. My right hon. Friend and I received the Board's Report late last night. It will be published shortly, but clearly the Government have not yet had time to study the Report and come to their conclusions. The House will not expect me, to say more about it tonight, but the House will recall, as I said earlier, that my right hon. Friend the Leader of the House said at Business time on 29th February, in reply to a question from, I think, the hon. Member for Howden (Mr. Bryan), that we might have a short debate tonight, on the understanding that we find time later on when it is more convenient to have a wider debate.

The coming year will be one of great challenge in the Post Office, its last full year as a Department of State. There is an enormous amount of detailed planning to be done to make the changeover work smoothly, and the closest cooperation will be needed next year between the management and the staff. By the time this Motion comes round next year, the Bill will, I hope, be well on its way through Parliament, if not already an Act. The coming year is going to be a challenging and exciting one for the Post Office and all the people who work in it.

10.20 p.m.

Mr. Paul Bryan (Howden)

We last debated Post Office matters on 15th March last year, a year ago next Friday. During those 12 months we have had the final Report of the Select Committee of Nationalised Industries on the Post Office—the first thorough Report of that sort for 30 years or more. We have had the White Paper containing plans literally to revolutionise the organisation of the Post Office, and we have had some of the first steps in that reorganisation, in anticipation of the coming Measure. We also had forecasts about wide-scale changes in the nature and scale of tariffs; the I.R.C. has deliberated, although we have not had its report. Tonight we had an admirable account from the Postmaster-General, and his remarks have indeed shown the great deal that has been happening in Post Office activities.

All in all, this has been a momentous year, a unique year, in Post Office history. Nevertheless, in that year we have not had a single debate on the Post Office. I am certain that the Postmaster-General has enough respect for the importance of his Department, for his job and for Parliament to acknowledge that this lack of debate has been ludicrous and deplorable. I do not blame the right hon. Gentleman personally; he must admit that it is part of the mess which the Government have got into in arranging their business, the same mess that has forced them to guillotine the Transport Bill on the strength of—

Mr. Speaker

Order. Any other items which the hon. Gentleman calls messes which do not arise on the Motion are out of order.

Mr. Bryan

I was about to say also that it is the same mess which has caused the postponement of the Post Office Corporation Bill, a Measure which would have given us ample time in which to debate Post Office matters.

I was glad to hear that the right hon. Gentleman recognises that although the putting off of the vesting day may be a matter of only a few months, this particularly concerns the employees of the Post Office. I put a Question about this to the Leader of the House some time ago, and although he brushed it aside, the hon. Member for Gateshead, West (Mr. Randall), who knows a great deal about these matters, was quick to spring to his feet to point out that however short the delay, it meant a lot to these employees.

To atone for the lack of debate, we understand from the Leader of the House that tonight's short discussion is to be followed by a full day's debate on a later occasion. I will, therefore, use tonight as a sort of hors d'oeuvre to the main debate and ask a number of questions to which I do not expect answers tonight, but with which I hope the Postmaster-General will deal in depth when the big debate takes place.

My first question concerns the future structure of the Post Office. According to the White Paper, we are apparently to keep the Post Office and the telecommunications side as one business. This was discussed by the Select Committee, and eventually, and with some hesitation, it came down on the side of this solution. On the other hand, as one reads the various arguments that were adduced, one wonders why that decision was taken. I need hardly enumerate the arguments, particularly since the Postmaster-General keeps giving them. In the White Paper is underlined the difference in the very nature of the two operations and they are factors of which everyone is aware—the capital intensiveness of telecommunications and the labour intensiveness of the Post Office; the scientific skills of the one industry and the sheer footslogging inseparable with the other; the speed of development on one side and the slowness of change on the other; and the completely different qualifications of people required for telecommunications compared with the staff of the Post Office.

The changes already made in the organisation not merely acknowledge these differences but are based on them. Even the common services are being split. One therefore cannot see the logic in the conclusion which has been reached and I trust that the Minister will explain why it has been reached. Is it a matter of the employees? Is it a matter of trade union pressure? Are the trade unions against a separation into businesses?

Mr. R. F. H. Dobson (Bristol, North-East)

The hon. Gentleman mentioned the differences in staff between the postal and telecommunications sides. I wish that he would spell out this matter. I am not sure what he means.

Mr. Bryan

I was referring to the different qualifications required on the two sides. I think that the hon. Gentleman would agree that they are a factor.

At Question Time last Thursday, I asked the Postmaster-General whether we could have the I.R.C. Report. I shall not press him further tonight on this matter, first, because I know that I shall not get it, and, secondly, because, as he said, he has undertaken not to divulge evidence given by private firms. The Select Committee followed its Report with minutes of evidence. Would the right hon. Gentleman publish a White Paper containing the substance of the Report without the evidence? I say that not as a debating point but because it is of immense importance.

Most of the ills of the telephone service, such as bad service, waiting lists, and so on, have been put down to the difficulties of supply. The Postmaster-General gives the suppliers a stiff talk, even over their cigars and port after dinner, about their deficiencies and late deliveries. Therefore, one asks oneself, "What is wrong? Are the suppliers bad or lazy? Is the method of buying wrong?" The bulk supply agreements are due to end this month. We should like to know what will take their place and, when we know that, why that is the chosen system.

When the Postmaster-General took office, he kindly gave us a promise that during this time of great development in the Post Office he would keep us informed to as great a degree as possible. I should like to ask him to keep that promise. In opposition, information is hard to get, but there is no subject on which information is harder to get than this. One can get it only from the Post Office or from the suppliers, and they are not exactly uninterested parties. Now an expert and informed Committee's Report has been kept from us. It would be of great assistance to us if we could be given the substance of it.

A small point which has been put to me is this. Why is it that the A.E.I. factory at Woolwich, which apparently was producing parts for the telecommunications industry, which is behind with its deliveries, has been closed? Perhaps the Assistant Postmaster-General can answer that question.

On postal services, clearly the most important event in the coming year will be the new structure of the tariffs. We cannot debate this matter until after the Prices and Incomes Board has reported. The Postmaster-General should not underrate the impact of new prices on the public. We as students of the Post Office are interested in the structure, but the public will be much more interested in the new prices. We have seen terrifying predictions in the newspapers about the price of the first-class mail going up to 6d. Some newspapers have said that it will go up to 8d. If this is anything like true, it is a fairly devastating prospect.

The last rise in the price of the first-class mail, from 3d. to 4d., took place almost exactly three years ago. If the price goes up to 6d., it will have doubled in three years. If it goes up to 8d., it will have increased almost three times, which is a pretty high rate of price growth even for Socialism. Whether or not one claims that the future first-class mail will 'De better than the present first-class mail, it is hard to think that there will be much difference, especially in view of what the Postmaster-General has just said about the 93 per cent. and possibly improving on that.

I ask the right hon. Gentleman to think very hard about the scale of this rise, because he accepts almost too easily the figures he is given. The figures are similar to those which convince businessmen that they should raise their prices. What annoys the public is that private firms which present the same argument are told by the Prices and Incomes Board to hold prices, while the Post Office can raise them. These figures will not be considered a particularly strong reason for price rises. They point more towards the right hon. Gentleman's remarks about management. Never mind the difficulties with equipment and capital planning and so on: it is astonishing the difference to costs which can be made by improved management.

What are the right hon. Gentleman's thoughts on the safeguards for the user when Parliament's scrutiny is a thing of the past? The White Paper contains promises of a users' council, which is not particularly reassuring. No doubt the council will do its best, but the record of users' councils for the nationalised industries and other industries is not impressive. Even with Parliamentary scrutiny, the method by which the user can make his complaints known, is inadequate. As prices rise, as they undoubtedly will, the public will be touchy about the Post Office, and surely it is worth taking a great deal of trouble to get public relations right.

The Post Office staff deal with complaints with courtesy—one cannot complain about that. The Postmaster-General occasionally brings out statistics of the 93 per cent. variety, which please him, but people realise that they are the Post Office's own figures. That does not mean that they are untrue, but they are rather like party political broadcasts. Those responsible believe every word, but they are not very convincing because everyone knows the source. When the postage is bad, the public cannot believe the Post Office's own statistics. It is happy to report on itself but is not altogether happy that other people should report on it. I cite as an example the I.R.C. report and we did not hear much about McKinsey's.

A commercial firm will naturally advertise and praise its own goods; but will go out of its way to get someone else to do so. If it can say that the goods have been recommended by the Design Centre or meet British Standard specifications, it knows this to be highly effective. On a lower level, "Daz" sales executives are always getting the public to say on television that their product is good, rather than saying it themselves. In the same way it would be worth while the Post Office studying the possibility of employing an organisation like Which? to carry out independent test postings and publishing the results of such postings. Similar sample surveys of the telephone service could be made and published.

Mr. Dobson

Is the hon. Gentleman not aware that there have been independent surveys in the last year, in which the Post Office's figures were tested, and that a Committee of the House considered them and compared them with those of Continental post offices and the American system in great depth and came out strongly in favour of our system? I can understand his point about advertising, but surely this is something which has been considered very recently.

Mr. Bryan

I am suggesting that this could be periodical and regular. I am sure that what the hon. Member said is true, but if we ask the general public whether this took place, they would not have the slightest idea. It makes no impact on them whatever, but if it were regular and they knew when it was coming, it would have a great impact.

The main debate is obviously the time to discuss the Select Committee, but this is the first time that on behalf of the Opposition I have had an opportunity to thank that Committee for the admirable document it has produced. I think it will become an historic document. Special thanks are due to the Chairman and the Vice-Chairman. I mention the Vice-Chairman, not because he is a Member from this side of the House, but because, owing to the way in which the Committee's work was divided into two parts, the Vice-Chairman, my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster), had more important work to do in that rôle than is normal for the Vice-Chairman.

The Report would have been useful at any time and by any standards, but in this year with so many important decisions to make, it has become a key document.

10.36 p.m.

Mr. Hugh D. Brown (Glasgow, Provan)

I should like to make some comments on remarks made from both sides of the House. I cannot get over the personal feeling of being influenced by what appears to be the reasonableness of the Opposition Front Bench speakers who are so temperate in their criticism that one hardly notices the knife stuck in the back.

On this subject, as on so many, it is still relevant to ask, what about the 13 years? Of course, the people get tired of this. They think it is an excuse for some of our failures and disappointments as a Government. They think it is just party politics without any thought behind the argument. The hon. Member for Howden (Mr. Bryan) is shaking his head, but he should have a quiet thought about whether he is right or I am right, because, if ever there were a Department whose basic problem has been caused by lack of capital and lack of planning in the past it is the Post Office. This has been brought out well by the very Committee to which the hon. Member has referred, the Select Committee on Nationalised Industries.

When any party or Government tries to effect radical changes—and most people would accept that the new concept of the Post Office is a radical change—it runs into trouble because any change raises problems which are deep-rooted and fundamental. They were not tackled by hon. Members opposite. Radical changes in management is a nice-sounding phrase by which to attack my right hon. Friend, but where was the radical management which could have been introduced in the 13 years?

Are we never to get credit for attempting to do anything in this place? Hon. Members opposite seem to have some responsibility. If they are to attack and criticise, they should be aware of the underlying cynicism in politics. It is not just a question of what happened in the 13 years, but of the effect created outside. Here is a Government trying to make radical changes and no credit seems to be given for the attempt to do something which hon. Members opposite failed to do in the past.

Mr. Bryan

Was not the hon. Gentleman's speech written and thought out before I spoke? It does not seem to have anything to do with what I said.

Mr. Brown

I can lay down my notes for the moment, because I am not reading my speech.

Linked with the need for radical management is the problem of productivity, complicated by the fact that there are too many unions. These questions are basic to an attempt to organise any industry efficiently and expect to enjoy co-operation with the staff. In spite of tackling the difficulties inherent in the new corporation idea, and in spite of the good things done, we run into some of the financial problems left to us. A report of the Select Committee on Nationalised Industries showed that without the benefits from improving telecommunications productivity in 1960–65 the Post Office would have needed by the end of the period a total engineering, clerical and operating staff of 206,000 instead of the 167,000 employed at the end of 1965. Since then it is estimated that there will be a saving of 80,000 staff due to productivity agreements. In installations there has been a 42 per cent. increase in productivity in three years, with a saving of 10,000 staff, which is magnificent. I may be wrong, for this is a complicated subject, but I suggest that few private firms outside can show anything like such an increase of productivity on the production side.

I get tired of the incessant sniping by hon. Members opposite because somebody did not get a letter delivered the morning after it was posted, or a telephone kiosk has broken down in their constituency. That seems to be an argument for less Parliamentary control over details in any nationalised industry.

The point I am trying to make is that we also rightly suffer the glare of publicity when there is any justified attempt at increasing prices to finance future investment. I am not now complaining about hon. Members opposite but am trying to think out in my own mind how the Post Office overcomes the disadvantage of being a publicly-owned body, with all the opportunity for public criticism that is certainly not directed against the manufacturers of telephone exchange equipment, to give a good example. My right hon. Friend may be able to give hints about placing orders abroad. I feel slight disappointment that we could not have been a little more imaginative in public ownership in Woolwich, and the other factory mentioned, with some of the research staff, because the entry of public enterprise into this might do more to stir up the private manufacturers than anything else.

We can afford to be optimistic about the future. It is bright, but there is a great deal of hard work to be done. One of the biggest problems I see is how to involve the staff associations, unions and management in industrial democracy. I do not think that anyone has the complete answer. But I think that 'in the future the Post Office will look at this a little more favourably. There is a challenge to the unions to try to work out what is meant by industrial democracy—I do not like the term "workers' control". The experiment of the new set-up in the Post Office gives every opportunity to those of us who have any ideas about the introduction of industrial democracy.

I cannot anticipate what might be in the report of the National Board for Prices and Incomes. I say this with no inside information or expert knowledge, but there does seem to be a case for better costing of the volume of equipment which is used only at certain times of the day—the peak period problem.

Whether this would mean that the business community would pay a variable tariff which would be higher than the domestic tariff I do not know. I would tend to think that it would if we are trying to assess what is to be paid by those who make the biggest demands on the service. The Post Office is doing an excellent job and I congratulate my right hon. Friend on the way he advocates and champions the cause of the Post Office.

10.46 p.m.

Dr. M. P. Winstanley (Cheadle)

I do not wish to follow the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) backwards in time into the 13 years with which he was preoccupied. Nor, I assure him, is it my intention to engage in violent and vituperative criticism. All hon. Members on this side, in paying tribute to the Postmaster-General for his enthusiasm for his office and his obvious interest and attachment to it, would wish to join him in what he said about the Post Office staff and the job they have done in the recent difficult conditions of expansion of which the Postmaster-General has reminded us.

It is an easy matter to gain kudos as a Member of Parliament by criticising any large statutory undertaking. Always, if one abuses a large enterprise of that kind, one will find a responsive chord here and there, because inevitably the size of the organisation is such that everyone has a complaint from time to time. We all feel a little bit desperate about our own complaints—a letter which is late, a post office or sub-post office which is closed when it was formerly open, or when we are not able to get through on the telephone. At these times we feel critical. At the same time we should not lose sight of the vast nature of this operation and the kind of work being done.

I do not wish to pour oil on the flames of criticism, but I regard it as my duty to explain the way in which the Post Office works and the difficulties it has and at the same time to ventilate legitimate criticism. We cannot put things right unless they are brought out into the open. The hon. Member for Proven will agree that hon. Members who ventilate criticisms and point to things that have gone wrong are not attacking the whole system but doing their duty.

I want to make one or two points arising out of what the Postmaster-General said. It seems to be a half-term report and he said that we would have a fuller debate on a later occasion. It would therefore be wrong to adduce complicated arguments here and now, and one would not get proper answers.

The Postmaster-General referred to the fact that efforts were being made to get the Post Office rather more consumer orientated. I would acknowledge that this is already taking place. Nevertheless, this in itself is not enough. It is not enough for the people in the Post Office to be conscious of the needs and irritations of the customers. It is necessary to see that explanations do not have to be given, but the service fulfilled. One of the difficulties facing the right hon. Gentleman and the country is to evolve a method of making an enormous concern like this publicly accountable and enabling it somehow or other to attain the best elements at least of private enterprise—making it both publicly accountable and also conscious of its need to serve the public and to be competitive.

Many of these things will be discussed when we come to reorganisation later. This would not be the right time to comment on what the right hon. Gentleman said about that, save that I want to say how glad I am that he has been able to allay the anxieties of many Post Office employees about their future. I understand that they feel that these anxieties have been allayed to a considerable extent. What he has said tonight will go still further to show them that their anxieties have been very carefully considered.

My personal anxiety is shared by many hon. Members. It concerns how, in the reorganisation, accountability to the House is to be preserved in some way. However right or wrong it may be for us to ventilate criticism of the Post Office in this Chamber, the fact remains that hon. Members on both sides frequently seize the opportunity so to do. They would rather regret it if opportunities of this kind disappeared.

I know the difficulties. We had exchanges on the statement made by the right hon. Gentleman, and he explained some of them. Nevertheless, I hope that, between now and the time at which the matter is debated more fully, he will be able to give further consideration to the possibility of establishing means whereby hon. Members in this House can continue to have rights available to them, perhaps comparable to those they have now if they do not happen to be precisely the same.

The right hon. Gentleman also referred to the fact that the Post Office was under-managed. One would be interested to hear his proposals. Many of our problems in this country are due to management in private industry and, in many cases, to over-management. It will be interesting to see how the right hon. Gentleman proposes to solve this interesting, provocative and important problem and how he will strike the balance.

I agree that the Post Office has been under managed. But I hope that the right hon. Gentleman will not move into the situation which we often find in private industry, whereby management becomes top heavy—and that perhaps is an understatement in some cases.

The right hon. Gentleman moved on through mechanisation to the Giro system. I have two remaining anxieties about this. Is it the intention to continue with a minimum limit, bearing in mind that all other countries operating the system, except two, do not do so? In the two exceptions the minimum is so small as to be virtually negligible. Secondly, there is the question of availability of the Giro in small post offices and sub-post offices in rural areas and so on. This is essential. Perhaps the hon. Gentleman will be able to reassure me on this point. Such general availability is important if the Giro is to give the kind of service we hope from it.

On telecommunications, the right hon. Gentleman explained the kind of expansion going on. One understands some of the difficulties he has to face in that kind of expansion. I want to raise a problem arising from digital dialling. One does not want to put the clock back and say that we should not have it. I know the reasons for doing it. Nevertheless, the right hon. Gentleman told us the other day that each directory inquiry costs him one shilling. With a new kind of directory, using numbers and not exchanges—directories in which it will be difficult to identify the subscribers about whom one has not full information—he will find a rapid increase in the amount of dialling for directory inquiries, and judging by the costings he gave us this could be a serious matter from his point of view. There are difficulties but I should like to see some method whereby something geographically identifiable from the local point of view could still be inserted in the telephone directory so that people could recognise those they were looking for.

It would also be helpful if they can do what they have hitherto done a great deal—used directory inquiries to look up people's addresses. This is useful, and it may disappear. The right hon. Gentleman mentioned the massive increase in houses to which letters have to be delivered. In dealing with this will he try to do something which will help not only his own Department, but others, namely to take steps about the numbering of new and old houses? I worked in a profession in which it was frequently necessary to look for house numbers at night, up trees, hidden under porches, and in very long roads where there was no number at all.

Postmen have this difficulty all the time and it has existed for years. No one seems to have been able to do anything. Perhaps the Postmaster-General will do something.

Finally, there is a point about the payment of retirement pensions. We know that some sub-post offices have to be closed, and there is a need for greater concentration and efficiency. Will he look again, not at opening more sub-post offices, but at the possibility of introducing a new method of paying retirement pensions, through, say, agents in certain areas where pensioners live, and where a sub-post office has been closed? These are minor technical points, and I hope that this "half-term" debate will provide an opportunity for some of them to be answered.

10.56 p.m.

Mr. Stratton Mills (Belfast, North)

Others have paid tribute to the staff of the Post Office and I would certainly wish to add to those. The experience of most of us has been that the staff of the right hon. Gentleman's Department are of extremely high quality and in this he is most fortunate. The hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) repeated the old criticisms of 13 wasted years of Tory rule, as he described it. I will not indulge in that kind of banter, but I think that the right hon. Gentleman would agree that in any service such as the Post Office, advances are made over a period of time and the Postmaster-General is the beneficiary of the work done by other Postmasters on both sides of the House, and particularly the work of my right hon. Friend the Member for Wallasey (Mr. Marples), who laid many of the foundations which have made the task of the right hon. Gentleman possible.

My hon. Friend the Member for Howden (Mr. Bryan) described his speech as an hors d'oeuvre. It has been a short debate, and the main meat is held over for another occasion. I should like to put a number of detailed points which arise and which is would be helpful to have answered.

My first is the position of the so-called cuts in the capital expenditure programme of the Post Office. The Chancellor told the House on 21st December, 1967, that approximately £10 million would be cut. We have had a number of Parliamentary Questions, probing as to how this came about, and have got a lot of details from the right hon. Gentleman, for which we are much obliged. Although there has been talk of cuts in the Post Office capital expenditure these are really phantom cuts, because the White Paper, Post Office Prospects 1968–69, shows that in 1967–68 the capital expenditure of the Post Office was £336 million. In 1968–69 it is £365 million, so that despite cuts it would appear that there is something like a £29 million increase in the Post Office capital programme in the forthcoming year.

I make no criticism of the Postmaster-General about this. The point that I wish to make is that the Chancellors cuts are of a rather phantom nature and this is clearly shown by these figures, and the right hon. Gentleman's White Paper. Perhaps the Assistant Postmaster-General can tell us to what extent he feels that the cut of £10 million will retard the development of the postal and telecommunications services; or does he consider that its effects will be fairly minimal, as most of it seems to me to be postponements and deferments?

Another point arises on page 12 of the White Paper. It would appear that there is an increase in the overall staffing of the Post Office of something like three-quarters of 1 per cent., which is comparatively minor. In 1967, however, the Administrative Section increased from 9,452 to 10,240, in 1968, an increase in administration staff of 788 or about 8 per cent., which by any standards is a fairly sharp increase.

We know about the 25 extra public relations officers which the Post Office has, but it would be useful if the Minister could give the reasons for this very sharp increase in staff. I appreciate that in opening the debate the Postmaster-General said that the Post Office was undermanaged. It may well be that this quite sharp increase arises in filling additional posts in the management chain. Perhaps we can be given more details about this, together with the estimates of the kind of increases in the Administrative Section of the Post Office which are envisaged for the next 12 months. Will they be of the same order of magnitude, or was this a once-for-all jump?

Another subject on which I wish to touch briefly is the range of telecommunication equipment which is made available by the Post Office. The magazine Which? dealt with this some little time ago. It does not seem that there has been any great improvement since then. Which? referred to the useful range of services which the Post Office telecommunications side provides.

For example, a person who is going out for the evening can arrange to have his telephone calls transferred to another number. That is a useful service. Business men can arrange conference calls linking three or four different centres. That, again, is a useful service. There are portable telephones which can be plugged into a socket and taken from one room to another. The Post Office can supply a longer telephone flex, an extra earpiece, wall-mounted telephones, amplifying sets for the deaf, an additional bell, an extra loud bell and a flashing light to show that the telephone is ringing.

Those are all very useful services, but it seems to me that there is not sufficient publicity about them on the marketing side to make the public aware that these services are available. I hope that before the operation of the new Corporation, the Postmaster-General will consider this matter and whether pamphlets advertising the range of facilities which are available could not be issued. Details of these services might be given at the front of the telephone directory. An effort should be made to tell the public of the services which are available, because both the public and the Post Office would be the beneficiaries.

The next subject to which I wish to refer is parcel traffic, about which we have touched in a number of debates over the years. The White Paper states, on page 8, that Parcel traffic fell by about 6 per cent. in the same period but is expected to remain at about this new level next year. Can we be given the Assistant Postmaster-General's analysis of the reason why parcel traffic has fallen? My feeling is that it has become extremely expensive to send parcels by post over the last couple of years. There has been a sharp increase in price. It may well also be that there has been a certain deterioration in the service. I would be obliged if the hon. Gentleman could deal with the reasons why there has been a 6 per cent. fall in parcel traffic.

It seems to me that the White Paper is a little complacent on this matter. It rather accepts the reduction as inevitable and that the drop of 6 per cent. will remain during the present year. The White Paper also deals with telephone faults on page 5. It says: … there are still too many call failures, too many faults and too much congestion in too many places. Improvement of the service for existing customers has priority and will remain the dominant task for 1968–69. I am glad the right hon. Gentleman is not complacent about the deterioration which has taken place in some places in the telephone service. These are very fine words and sentiments, and I hope it will be possible to make a reduction in call faults. Perhaps we could have an explanation of the steps which are to be taken to bring about this change.

This h as been a very short debate, and I have touched on a wide range of subjects, as have other hon. Members. It may not be possible for the Assistant Postmaster-General to cover all these matters in the short time available to him, but I trust that in the later debates he will take notice of these points and deal with them then.

This will be a very eventful year for the Post Office, and I hope it will be possible for us all to approach the Bill re-shaping the Post Office in a constructive spirit. I am sure my hon. Friends will do so, and I hope the Government will do likewise.

11.7 p.m.

The Assistant Postmaster-General (Mr. Joseph Slater)

My right hon. Friend the Postmaster-General in opening the debate said that it was expected that we shall have a further debate in the near future on the subject of the Post Office, and no doubt that debate will cover a very wide field.

I should like to deal with the remarks of the hon. Member for Belfast, North (Mr. Stratton Mills) about the cuts. Because of the economic situation, the Post Office, like every other Department, is being required to reduce its capital investment in 1968–69 by £20 million and in 1969–70 by £10 million. This will be achieved by cuts of £2 million for posts and £18 million for telecommunications in the first year, and £1 million for posts and £9 million for telecommunications in 1969–70.

The postal share of these cuts will be achieved by postponing a number of smaller building schemes without detriment as far as possible to the main mechanisation programme and the buildings necessary to support it. Expenditure on new vehicles is also to be cut, mostly in respect of replacement vehicles, so that labour saving schemes involving new vehicles may proceed. In this way, the cuts, which are bound to be painful, have been applied with the minimum loss of efficiency to the service.

On the telecommunications side we shall make the cuts by phasing back the programme, deferring stores purchases, a slower replacement of vehicles and postponing some buildings. We shall keep as first priority the need to improve, or, where it is very good, to maintain, service to our present customers. Business requirements will have precedence over residential growth. Our drive for improved productivity will be stepped up wherever possible and in no instance relaxed. I hope that answers the questions which have been asked about the cuts.

There are few opportunities in the House to discuss the Post Office, as the hon. Member for Howden (Mr. Bryan) said. Nevertheless, this short debate has been a very good one, and I should like now to deal with some of the hon. Gentleman's points.

He asked why the A.E.I. factory at Woolwich had been closed. The problem facing the telecommunications industry now is not shortage of capacity so much as organisation of production. The management of G.E.C. has told us that it can meet all its orders more efficiently by concentrating production on its other and newer factories in development areas than by leaving some of it in the old factory at Woolwich. Therefore, the change has been made in the interests of efficiency, and it must be said that this is a matter for the company and not for us. We are the customer, and the company is the supplier.

The hon. Gentleman raised a number of other wider points on which he said that he did not expect an answer tonight, but perhaps I might comment briefly on some of them. As regards purchasing policy, the telephone apparatus agreement will not be renewed on 31st March. We are now discussing with industry arrangements for the future purchase of exchange agreement, and my right hon. Friend will make a statement on this shortly. On tariffs, my right hon. Friend is very well aware of the impact of prices on the public. I can assure the hon. Gentleman that we make every effort to keep down costs by better management before considering raising prices. I would also point out that we do not expect more favourable treatment than private industry. Our charges have been referred to the National Board for Prices and Incomes in the same way as charges in the private sector. The hon. Gentleman should not believe everything that he reads in the Press about the size of possible increases accruing from that type of investigation. The points that he raised on more general matters will be looked into, and we hope to be in a position to give him all the answers that he requires when we have this major debate on the Post Office.

The hon. Member for Cheadle (Dr. Winstanley) came back again to the Giro, and he asked why there is to be a minimum transaction amount of five shillings. The answer is that it would be uneconomic to allow transactions below that figure. Basic to the whole concept of Giro is the transfer of funds from one account to another free of charge, and that could not be done if transactions below five shillings were permitted. Moreover, market surveys have shown that there will be a negligible proportion of account holders who would want this facility. It must be remembered that it is an innovation for this country. When I was in Sweden, I saw it in operation, but we have yet to get it off the ground here and see how it goes.

I was then asked why the full range of Giro services will not be available at some very small sub-post offices, where it might be thought that its services are most needed. Although not all the 23,000 sub-post offices will transact the full range of business, the vast majority will. It is not expected that account holders will be inconvenienced by the restriction of the service at very small offices.

I thought that my hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) made a very interesting speech. He put the case on behalf of the staff in the Post Office, and drew attention to the amount of work which goes into improving productivity. He pointed out the number of trade unions operating within the Post Office. Finally, he expressed the hope that, even when the changeover takes place, the Post Office can engage in production, and so on.

My natural reaction is to be on his side on some of his points. However, I must point out that, during the last 12 months since we came to the House to make an application similar to that which we make tonight, we have endeavoured to give good service to the general public, and those in the service of the Post Office have at all times lived up to their positions of trust and responsibility.

When, last year, we debated the Post Office, we looked back on a year of achievement. Tonight we have brought the picture up to date. My right hon. Friend, in his very interesting speech, pointed out what we are looking forward to in the year that lies ahead. He made reference to the great challenge to come. Posts will be revolutionised by the abolition of the present letter tariffs and their replacement by a system where the poster, not the contents of a letter, will determine the speed with which it will be delivered.

My right hon. Friend referred to the Giro system which will give the man in the street the benefit of a current account banking system for the first time and the businessman a really modern money transfer system planned for the computer age.

He also referred to telecommunications and the investment of £330 million in capital equipment to help cope with the rocketing demands for its services. Still more important than this for its customers and for its future will be the introduction to Parliament of a Bill to convert the Post Office from a Department of State into a Public Corporation.

Finally, I should like to pay a brief tribute to those in the Post Office who do not come into direct contact with our customers and are almost unknown to them—our managers and office workers. It is on these people that the brunt of the changes in the forthcoming year will fall.

My right hon. Friend has pointed out that the Post Office is under-managed. The new organisational structure and the new management recruitment centre we are setting up will resolve this problem, but in the short term all these changes will make an already difficult job still more difficult. Nevertheless, in spite of this, my right hon. Friend and I are confident that these challenges will be met and overcome. It is this confidence in the quality and determination of our staff at all levels to deal successfully with the problems of the coming year that leads me to ask the House to support this Motion.

Question put and agreed to.

Resolved, That the Postmaster General be authorised, as provided for in section 5 of the Post Office Act 1961, to make payments out of the Post Office Fund in the financial year ending with the 31st March, 1969.