POST OFFICE

HC Deb 26 March 1969 vol 780 cc1643-85

Mr. Speaker

I have suggested that we discuss together the two Motions on the Post Office and I will put them separately at the end of the debate.

4.4 p.m.

The Postmaster-General (Mr. John Stonehouse)

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 1970. I am grateful to you, Mr. Speaker, for ruling that we shall be discussing at the same time the Motion, That the limit of the Postmaster General's indebtedness to the National Loans Fund under section 10(2) of the Post Office Act 1961, as amended by section 1(1) of the Post Office (Borrowing Powers) Act 1967, be increased from one thousand seven hundred and fifty million pounds to two thousand two hundred million pounds. If the Post Office Bill which is now before the House is enacted, this will be the last time that a Postmaster-General will stand at the Dispatch Box moving such a Motion which, since the passing of the Post Office Act, 1961, has been an annual event. The Post Office is a vast concern. We employ 420,000 staff and we are the largest industry in Britain in that respect. It is impossible in the time available to deal with all its activities, and I therefore intend to concentrate on the telephone business, particularly as it is that which will absorb the major part of the development programme which I hope the House will approve today. If there are questions on other aspects of the Post Office, I shall do my best to reply to them if I am allowed leave to speak again.

May I deal first with the second Motion? Section 10(2) of the Post Office Act, 1961, as amended by Section 1(1) of the Post Office Borrowing Powers Act, 1967, fixes an upper limit on my borrowing powers of £1,750 million, with provision for increasing this limit to £2,200 million by a Resolution of the House. However, as the House knows, Clause 36 of the Post Office Bill provides initially for an upper limit on the borrowing powers of the new Post Office Corporation of £2,300 million. Hon. Members may wonder why we need a borrowing powers Motion.

The situation is that our total indebtedness will amount to about £1,680 million at the end of this month. Provided that there is no undue delay in the passage of the Bill, vesting day for the new Post Office Corporation will be 1st October, 1969. Certainly we shall have reached our upper limit of £1,750 million before 1st October and we shall need some additional provision if the necessary expansion and refurbishing of the telephone system network is not to be set back. We have therefore brought forward this Motion now, at the same time as the annual Motion on the Post Office, to tide us over until vesting day. When the Post Office Bill becomes law and assuming that Clause 36 is enacted in its present form, the borrowing powers set out in the Motion will be superseded on vesting day by the borrowing powers of the new Corporation as laid down in the Bill.

Before I discuss the future development plans, may I give a progress report on what has been achieved so far? The House may know that our 'phone network is the largest in Europe and the third in size in the world. Our customers make 21 million phone calls a day and we expect them in the next year to make nearly 9,000 million phone calls in the year as a whole. They pay us £450 million for their calls. In 1960, there were 8 million 'phones in Britain; today there are nearly 13 million. There has been a tremendous expansion.

But not only has the expansion been considerable; the rate of expansion has increased. On 13th March, the hon. Member for Norfolk, South (Mr. J. E. B. Hill) asked me how many new 'phones had been installed in each year since 1946. From the details which I gave in the OFFICIAL REPORT it is clear that this year we will be installing 820,000 new phone connections. This is double what was being achieved in each of the years in the early 1960s. It is an achievement of which we can be extremely proud. We foresee a dramatic improvement in performance compared with the last five years.

I will, if the House will bear with me, give some figures of new exchange connections installed. For the five years ended March, 1959, there were 1,892,000; in the five years ended March, 1964, there were 2,255,000; in the five-year period ending this March the figure has risen to 3,262,000. The increase in 1963–64 over the previous five years was 19 per cent. but the figure for 1965–69 over the previous five years is no less than 71 per cent. This demonstrates the tremendous expansion programme in which we have been engaged, and I think it is to the credit of the Post Office and of its engineers and also of the suppliers of the Post Office that we have been able to achieve these results.

As the House knows from the White Paper on Post Office prospects, we shall spend £357 million next year on new equipment and buildings. This is part of our Post Office five-year plan to meet the truly stupendous growth in current demand. For the next five years we shall spend £1 million a day or roughly £42,000 an hour day and night. We shall be financing this massive £2,000 million budget half from our own resources. This tremendous expansion programme will help us to make up for the underinvestment in the Post Office in the 1950s. About one-third of our £2,000 million investment will be used to improve services for existing customers and most of the remaining £1,400 million will provide services for new customers. Despite delays in exchange equipment installations manufacturers are managing to speed up work in progress. New exchanges or extensions to existing installations will be opened at a rate of almost three a day in 1969 and £112 million will be spent next year in the purchase and installation of exchange equipment.

Most of this money is needed to meet the steady growth in demand for domestic 'phones. About 750,000 lines will be put on the network to connect subscribers with the 'phone exchanges and about 1,350,000 connections with the 'phone system will be made during 1969–70. To ease the pressure on the trunk network about 12,000 circuits will be put into the system and this represents an increase of 16 per cent.

The House has been concerned in past years with the waiting list and I know that this has been a great embarrassment to many of our constituents, but between April, 1968, and the end of February, 1969, the waiting list was reduced by 48,000, and it should fall by another 6,000 by the end of this month to 84,000. This compares with a peak figure of 138,000 in March, 1968. We are, therefore, making considerable progress in eliminating this list, and this will be considerably reduced during the next 12 months. We plan to meet 95 per cent. of all 'phone applications on demand in about 12 months' time. Currently there is no waiting list at 4,000 out of 6,000 exchanges, and we are now meeting over eight out of ten orders for 'phones on demand. This is a very fine achievement and I am delighted by the progress which has been made in this respect. We do need, of course, co-operation with industry to provide the exchange equipment and the plant which is required, but if we have this co-operation and if we can meet 95 per cent. of orders on demand we shall be very near the maximum possible achievement, because there will always be approximately 5 per cent. of orders which cannot be met on demand because houses are in situations where lines cannot be put up very quickly.

So, with the virtual elimination of the waiting list, the Post Office will be able to go all out to promote the most efficient use of the system as a whole. We have already begun a campaign to promote the use of the system in off-peak hours, and we are spending this year £300,000 on the "The best time to 'phone your friends? After six and at weekends" campaign. This may sound a lot of money but if it produces marginal increases in off-peak usage we will make a net profit of £1.3 million on this improvement.

As to the future. The House knows that the Post Office is already engaged in Washington New Town in a new development for installing TV. links along with 'phone links, and eventually we shall be able to develop a system which will meet all the householders' communication needs—including facilities for facsimile printing. The first homes to have the development which I have described at Washington should have them this summer, and eventually we plan to install the scheme in about 1,000 homes on that particular estate.

As for 'phoning abroad, we have had interesting developments in international subscriber dialling, and already six of the United Kingdom's largest cities can dial numbers in Belgium, France, West Germany, Holland, Norway and Switzerland, and during 1969–70 it is planned that London customers can dial to parts of North America, including New York. The Post Office is developing new kinds of exchanges using the most up-to-date electronic devices. Microelectronic devices in these exchanges promise to increase the reliability of the service at no extra cost, and save much space. For example, a single device the size of a pinhead used in micro-circuitry contains the equivalent of 600 separate components. The use of micro-circuitry in conventional exchanges will reduce the risks of a customer obtaining the wrong number.

The Post Office, we believe, is the first public service in Europe to use these devices, and largely as a result of the Post Office interest in the development of electronic exchanges British manufacturers are well to the fore in the commercial development of this equipment. We also have a very well developed data transmission service. We have seized the opportunity of pioneering a service which will give British industry invaluable assistance in the future. Our Datel 2400 Service already enables a computer to send and receive information over a private wire network. Computer talks to computer. Exciting developments are planned for Datel in the next year. The "Midnight Line" will allow Datel subscribers unrestricted access to the whole United Kingdom STD system between midnight and 6 a.m. at only rental charge with no charge for calls. Data communication services will be extended to Australia and parts of North America, and services already exist to the United States and many European States.

There are also very exciting developments in space communications. We recognise the importance of these. We have a very substantial investment in COMSAT which is providing increasingly important means of communication. Within the next two years, more than half the telephone communications between Britain and countries outside Europe will be relayed through space.

But although we are concerned about space communications, we are also concerned to provide up-to-date equipment for the ordinary subscriber. We are new developing a push-button dialler which, with a number of buttons, enables the customer to call most of the numbers he uses simply by pressing one button and allowing the instrument to dial it for him. This dialler can be used equally effectively for local, trunk and international calls where subscribers can dial direct. If it is connected to a loudspeaker phone, a customer will have a very efficient communication system which will save him much time, and will also save him overhead costs by allowing the machine to do most of the phone work done on P.B.X. exchanges. The most important feature of this device is that misdialling is abolished.

I should like to refer to some of the wonderful experimental work being done at the Post Office Research Station in co-operation with some of our suppliers. The year 1972, just three years off, will see a momentous advance in the transmission of phone messages and T.V. programmes. Using microwave devices, we will be able to convey, through a pipe no more than two inches in diameter, one-third of a million phone circuits or 300 two-way T.V. channels. Initially, development will be over a distance of 20 miles, but it is hoped that the system will be sufficiently proven to meet the expected dynamic increase in demand for the services on the network in the next ten years. Currently, we have in service cables which can handle only 10,000 telephone circuits or a single T.V. link, so this new microwave 2 in. pipe will increase productivity by a quite extraordinary amount.

Looking further ahead, I can tell the House that Post Office research experts are now working on the use of hair-thin glass fibres, and laser beams, for the transmission of phone and T.V. messages. A single glass fibre will carry 1,000 phone circuits or a single colour T.V. programme, but if a glass fibre cable the thickness of a pencil is used, it can convey 100,000 phone circuits or 100 colour T.V. programmes. We have in hand in this respect some of the most advanced experiments in the world.

I believe that I have said enough to convince the House that the Post Office development programme is well justified. It is geared to commercial ends, and will meet a known demand. It is a programme of which I think the whole community can be proud. I therefore commend the Motion to the House.

4.23 p.m.

Mr. Paul Bryan (Howden)

These Motions usually provide a fairly routine annual occasion on which we can conduct a wide ranging debate on Post Office matters. The Postmaster-General has chosen to use this occasion to give us an account of the telephone and telecommunications programme. He is perfectly justified in doing so. Telecommunications are, after all, our biggest money spender, and most of the money about which we are now talking will go into telecommunications.

In passing, I would pay a tribute to the very original research going on at Dollis Hill and other places, which we have had the privilege of seeing. What our people are doing in that sphere is quite remarkable considering the resources they have at their disposal as compared with the Americans. However, this afternoon I shall ask questions on the postal side, because it seems to me that in the short term it is on that side that most questions need answering, especially in relation to the recently published White Paper "Post Office Prospects 1969–70".

Quite clearly, every hon. Member wants to see an improvement in the Post Office, but no one can deny that we have had a bad year, and a year to forget. We have had this unnecessary and unprecedented strife, we have had the two-tier snarl-up, and we have had the London Directory fiasco. All three Postmasters-General in the last years appear to have been accident-prone, and we want to get out of this rut. All hon. Members present—although there are not many present on the other side—are biased in favour of the Post Office.

What we want to see is the turn of the tide, and the first and obvious sign of the turn of the tide would be some indication that the Postmaster-General was getting a grip on events. No better sign could emerge than the fact, if it is a fact, that the accounts are coming out as budgeted, especially in this year, when we have had not only major tariff changes but a major restructuring of tariff has been born with all the birth pangs of a 90-page P.I.B. Report.

This chapter of Post Office history started with two reassurances. First, we had the reassurance of the P.I.B. Report, which stated: To the best of our judgment the increases which we have recommended should be adequate until further changes become inevitable on the introduction of decimal currency in 1971. We then had the Postmaster-General's own reassurance in this House on 27th February, when he said … there will be no increase in postage rates during the next financial year."—[OFFICIAL REPORT, 27th February, 1969; Vol. 778, c. 1908.] So far, so good. But then it seems to me that the red lights started appearing.

First of all, the sheer organisational shambles of the early days of the two-tier system would appear to any businessman to knock any sane budget out of shape. One wonders to what extent it has been possible to estimate, in terms of overtime and every other disorganisation, what has been the effect on the accounts. I do not think that it can be measured until the final accounts are published. In the longer term, the damage we have seen in the form of a reduction in postal traffic has been twice as much as was expected. It would be as well if the Postmaster-General could enlarge somewhat on paragraphs 49 and 50 of the White Paper, which deals with the losses in this respect.

The second red light appeared on 13th January, when we read in the newspaper that Mr. Wolstencroft had given instructions to regional directors that cuts to the tune of £4 million should be made in this financial year. I do not say that this was a panic measure, but it seemed an exceptional order to give only four months after a tariff increase and it made one wonder whether the postal services would reach their financial targets.

The third red light appeared 2½ weeks later, when we had the strike. Again, I expect that the financial results of that strike must at present be incalculable. We are told in a vague way in paragraph 49 of the White Paper that the strike, plus the reduction in postal traffic, means a loss of £5 million, but this is very roughly put, and we shall not know the full scale of the damage until the final accounts come out.

Then all our fears appeared to be confirmed—and I wait to hear from the Postmaster-General whether or not this is so—when we saw in the Press accounts of the Press meeting which the Postmaster-General had to usher in "Post Office Prospects 1969–70". Here is what was said in the Financial Times: Dearer parcels and money orders warning by P.M.G.: A clear warning that Post Office charges for parcels, postal orders, money orders and some other loss-making services may have to be raised before the end of the year was issued by the Postmaster-General"— and so it goes on. In the same report, it is said: Mr. Stonehouse told me that despite a drop in traffic the two-tier letter service has made a good contribution to postal finances, and there is no question of these charges being raised again this year. I cannot imagine how the two-tier system can have made a good contribution, when the drop in traffic was twice as great as was expected. I should have thought that the contribution was as bad as the right hon. Gentleman could have feared—though, perhaps, this is another of his well known successes.

In the same piece in the Financial Times we had the first news, as far as I was aware, that the overhead expenses incurred in the setting up of the new Post Office Corporation would be £9 million. The House should have an explanation of that. Having debated the matter for 24 sittings in Standing Committee on the Post Office Bill, we know that this operation will involve a major reshuffle of personnel, but we did not gain the impression that an enormous Post Office palace was to be built to go with the Post Office Tower. Where will the £9 million be spent? Was it budgeted for originally, and how has it been taken into account in the subsequent calculations?

The document finally published following that Press conference is very informative, but there are some questions to be asked. The first general question is, To what extent has the rise in the tariff been effective? For about six months of the past year, these prices have been in force, but, when one comes to the details, one cannot identify the good results. I take page 99 of the Post Office Report and Accounts for 1967–68 and compare the figures there with the estimated results for 1968–69 given in paragraph 50 of the Prospects White Paper. In the Report and Accounts, the figure for inland parcels is plus £2.4 million. In the prospects for 1968–69, it is minus £3.5 million. If parcel rates have risen, why should the loss rise as well? For postal and money orders, the figure is minus £1.6 million in the Report and Accounts, and it stays at about the same figure in 1968–69, presumably on higher charges. For overseas services the figure is plus £2.7 million in the Report and Accounts, but it is only plus £1 million in the 1968–69 figures. All that needs explaining in relation to what one had thought were rises in charges across the board.

Nothing that the Postmaster-General has said today or at any time—he did not refer to it in terms today—has led us to believe that all the warning lights constitute only a false alarm. Until he gave his explanation, I wondered whether the increase in borrowing powers up to £2,300 million to be available in the autumn meant that there would be delay in the vesting date. I take it from what he says that the vesting date is still timed for 1st October and we can expect it then.

Mr. Stonehouse indicated assent.

Mr. Bryan

Will the right hon. Gentleman enlarge on the question of the extent to which we are financing resources from current earnings? In the Standing Committee, he said that he expected during the next five years to finance to the extent of about 50 per cent., but in the year 1968–69, so far as I can see, juggling with the figures as best I can, it is a much lower figure. I should like the right hon. Gentleman, with the computerised resources at his command, to give us the figure for that actual year.

We have welcomed the reassurances which the Postmaster-General has given us in the past, but I want him to reinforce them today by an assurance that the Chancellor will not raise the tariff for him. At first sight, this may seem a rather far-fetched and ridiculous apprehension, but one does not have to go far to fetch it—only so far as the autumn Budget of July, 1966. The right hon. Gentleman will remember that a puzzled nation not yet used to Socialist thinking was told that if laundries put up their prices this would wreck the economy but that a healthy rise in Post Office charges would be for the general benefit, and there was at that time, in what one can call a Budget, a rise in Post Office charges.

Being a suspicious man, I suspect that the PostOffice is wide open to another dose of the same thing. We are now approaching a Budget in the normal crisis situation which has obtained every year since 1965. All the standard brakes have long ceased to work and nothing is more possible, it seems to me, than that that brake may be tried again. I ask the Postmaster-General, therefore, to let it be known that this is one part of the Chancellor's Budget Statement which he feels it his duty to anticipate.

4.36 p.m.

Mr. James Dempsey (Coatbridge and Airdrie)

The occasion of these Motions gives us an opportunity to have a wide debate over a broad range of activities and services conducted by the Post Office, and I have one or two questions to put to my right hon. Friend on certain aspects of his Department's work.

My right hon. Friend has said that there are areas where there is no longer a waiting list for telephone installations. However, I often wonder whether, in making these calculations, he takes into account the number of shared service lines operating within areas where there is supposed to be no waiting list. Although the Post Office authorities do their utmost to ensure that the shared service is reasonably satisfactory, it is no alternative to an exclusive line. All of us realise that.

I am sure that many hon. Members received representations from irritated subscribers asking to be spared the ordeal of a shared service line. I frequently have to make representations to the West of Scotland telephone manager asking him sympathetically to consider such requests. I am glad to say that our telephone manager, Mr. Warnock, has been a thorough gentleman in considering these representations and he does his best to provide an excellent service. Where shared service lines are unavoidable, he does his utmost to ensure that they are introduced without embarrassment to any subscriber.

Nevertheless, time after time one receives complaints from subscribers who do not wish to share a service with others, in many cases for good and valid reasons. This sort of situation undoubtedly results in some of our technical staff having to come into unpleasant contact with irritated subscribers in many parts of the country.

In my view, my right hon. Friend should, when stating that there are no waiting lists in some areas, take account of the number of shared services and the fact that there are people still waiting for an exclusive line. It is a misnomer to say that there is no waiting list, giving facts and figures in such circumstances which do not take account of shared lines. It is a misleading statement if one does not take into account that most, if not all, subscribers insist unequivocally on an exclusive telephone service. I hope that my right hon. Friend will take account of this matter.

I also hope that he will take into account that in those areas, and no doubt in others, we still tragically suffer from the lack of public telephone kiosks. There has been some regrettable, if not shocking, vandalism in certain parts of the country. Kiosks have had to be improved and repaired time after time at the expense of the telephone service. No sooner is this done than the midnight marauders yank the telephone receiver from its hooks, pull out the flex, smash up the coin box and complete the job by desecrating the windows. This has come to be accepted in certain parts of the country.

What surprises me is that the Post Office telephones department has not tried an alternative system of providing the essential public telephone service. If there is an accident and one wants to call the police, send for an ambulance or seek medical help the situation is extremely hazardous when there is no public service telephone. As a consequence, some private telephones have to be used in such emergencies. I should like my right hon. Friend to consider installing the public telephones in the homes of residents willing to undertake the responsibility of having them in return for a payment. I remember one public-spirited individual who was willing to have a kiosk in his garden, adjoining his house, so that it could be supervised and protected against damage. But for some inexplicable reason this magnanimous gesture was pooh-poohed by the Post Office I shall never know why.

Public telephones are indispensable to a community, and if we cannot provide them on a public highway we should consider providing them inside the homes of public-spirited individuals who are willing to have them, and we should pay them something for the trouble and bother of providing the service at irregular hours through the night. I do not believe that people would even object to paying more, if need be, to have such a desirable service provided for the community. I ask my right hon. Friend to examine that suggestion and consult his managers and other staff officers throughout the country. If he is not wholeheartedly behind the idea, I hope that he will at least conduct an experiment to see what can be accomplished by such a system in providing a service that we know will involve no maintenance costs, since it cannot be ravaged by vandals.

Another matter which I have raised over the years, is the provision of a 24-hour radio service. Our service usually finishes at 2 a.m., but there are very strong requests for a continuation through the night, not necessarily with jazz or pop music, but with light, entertaining music, to give the old, the weak, the disabled, and the sick, who cannot enjoy a night's sleep, the comfort of appropriate radio music. I do not think that it would cause any irritation to the neighbours, because if it is light, attractive, soothing music it can be regulated, and the categories I have mentioned could use it to the best possible advantage. The worst companions of the elderly are fear and loneliness. One of the most effective ways to counter those notorious neighbours would be to give them a reasonable degree of light music throughout the night. The cost would appear to be infinitesimal, and I am convinced that the benefit of such a service to the sections of our community that I have mentioned would outweigh the cost. I hope that my right hon. Friend will consider this suggestion.

I should also like to draw my right hon. Friend's attention to the problem of costs generally and to the fact that large numbers of people are escaping their obligation to the Post Office. We know that many defaulters do not pay their television licences, and we appreciate the efforts of the Post Office to bring them to book, and ensure that they meet their due share of the cost of providing the television service to the country as a whole. But I believe that some officers are over-zealous in their activities. One evening I had the experience of sitting in a pensioner's home when the television detector Z-car, as I call it, arrived in the area, with all its detectors and aerials, plotting who had televisions and checking those who were not paying their licence fees. Two gentlemen strode into the old soul's home, and I had a job convincing them that she had never had a television set in her life. After some discussion they left.

Mr. Bryan

On a point of order. Would not this matter come under the B.B.C. Vote rather than the Post Office vote, Mr. Deputy Speaker?

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. The hon. Gentleman may be right, but the debate is very wide.

Mr. Dempsey

I feel that as we are spending money on the Post Office, and as this is a Post Office responsibility, I am entitled to spotlight the attitude being adopted towards pensioners. Two weeks after the incident I mentioned, the same Z-car came back when I was not there. The same crew again strode into the old lady's house, and ranged over the place looking for an undisclosed television set. That is enough to unnerve an old body. This old lady was 70, and she was immobilised with arthritis. While my right hon. Friend is quite entitled to ensure that the greatest zeal and vigour are applied in bringing to book those culprits who are defaulting on the payment of their licence fees, he should instruct such officers that they should have sufficient common sense to know that it would be very difficult to find any old body of that age on £4 10s. a week with a television set under the bed.

Those are some of the aspects of the Post Office services to which I wished to draw my right hon. Friend's attention. I hope that he will realise that they are all extremely important. They are topical, and many of them involve cost to the Post Office, subscribers and consumers, and all who use the services under his jurisdiction. I hope that he will give practical consideration to those points, and that as a result we can look forward to seeing in future statements that our deliberations have influenced his thinking.

4.49 p.m.

Sir Henry d'Avigdor Goldsmid (Walsall, South)

The hon. Member for Coatbridge and Airdrie (Mr. Dempsey) made a characteristically valuable contribution to our debate. It was particularly valuable today, because I think I am right in saying that he is the only hon. Member opposite who is not paid to attend. The Government's lack of interest in the matter is pathetic.

Over the years I have in some respects spent too long in the Post Office. I think that I was the only member of the Select Committee on the Nationalised Industries that studied the Post Office also to serve on the Standing Committee considering the Post Office Bill, and therefore it is rather difficult for me not to repeat myself. However, there are one or two new points I want to make.

We all of us regret the absence of the Assistant Postmaster-General. We know what a very valuable and stalwart part he plays, and we regret the reason for his absence. I hope that the views of those who sat on the Committee with him may be conveyed to him in due course.

The Postmaster-General left himself wide open when he referred to the "virtual elimination" of the waiting list for telephones. Naturally I have almost continuous communication with the telephone manager for the West Midlands, and I must say how admirably courteous and useful I have always found him to be. But I had a case in my postbox of a constituent who applied more than a year ago for a telephone and has now been informed that he will not receive service for yet another year. In other words, he will be two years on the waiting list.

I was rather surprised by what my constituent wrote and took it up at once with the telephone manager. I told him that my constituent had stated that, having applied for a telephone more than a year ago, he had been promised installation in October 1968 and then subsequently very early in 1969, but was now told that it will be early next year before the Post Office has any new equipment. I asked the telephone manager whether this was correct. In his usual courteous way, he replied, It is true that in all probability we shall not be able to provide service for your constituent until early in 1970. It is no good telling my constituent that the Postmaster-General says that the waiting list is virtually eliminated. He is not to be consoled by that. Having applied a year ago, he must now wait another year.

Instead of making rather vainglorious remarks about the waiting list in parts of the country where the service is complete, it would be far better if the right hon. Gentleman turned his attention more to the black sheep. I shall not take up with him the question of shared lines, because if I did my correspondence with the right hon. Gentleman would never end. I am simply trying to get service, and there is no doubt that there are great deficiencies due to the failure of the Post Office in planning and making provision. It would be much more sensible—and better for public relations—if the right hon. Gentleman frankly admitted that there had been a miscalculation, and instead of telling us about pie in the sky tomorrow when the waiting list will be eliminated—when, presumably, 95,000 new customers will receive immediate service—if the right hon. Gentleman were to say, "Yes. We have a backlog to get through. We are doing as much as we can and are concentrating our attention on the most seriously hit areas."

I want to make my speech mainly in connection with the National Giro. When we discussed this in Committee before Christmas the position was wide open. That is not so today. The information one has comes basically from the right hon. Gentleman's interview with the Press, and also from an article in the Financial Times of 19th March by Mr. Colin Jones. The heading of the article was: "Executives keep their fingers crossed". It would have been very much better if those in charge of the Giro had kept their fingers crossed about six months ago when they were making some vainglorious statements which have since had to be taken back. We were told in a statement—and the right hon. Gentleman will remember this, although it was not made on his authority—that the Giro was going to take over the London money market. It is, therefore, pathetic to learn from the Bank of England that the total deposits in the name of the Giro are about £10 million.

We were also told that the unfortunate officer in charge of the Giro activity was setting his sights for between 300,000 to 400,000 up to one million accounts by the end of the year. Even by Post Office budgeting this is pretty wide. How can the poor man really set his sights at anything between 300,000 and a million? He must have some idea of where he is going. We are told that he is keeping his fingers crossed. It would be much better if he uncrossed them and got on with the job of getting subscribers.

The success of the Giro has not been startling so far, and I will tell the right hon. Gentleman why. The Giro hoped to sell its services to about 200,000 business accounts and about one million private accounts. That was the target. Instead of 200,000 business accounts, there are about 30,000. That is about 15 per cent. of the target. The obvious reason is that businessmen find it easier for people owing them money to make their payments.

But the earnings of the Giro depend not on business accounts but on private accounts, because it is there that the money will stay. However, while the target was one million private accounts, only 70,000 have been achieved—7 per cent. I suspect that further penetration is going to be increasingly hard. The Financial Times article refers to people called "the great unbanked", consisting of two-thirds of the population. These are the people for whom the Giro system is going to provide a service. But it takes more than an optimist sitting on the benches opposite to get one million people to change their habits in a year. These people are not suddenly going to decide, "We shall not have bank accounts but Giro accounts". I want to make my position and that of the Opposition clear. We welcomed the Giro.

Mr. Ray Mawby (Totnes)

I did not.

Sir H. d'Avigdor-Goldsmid

Perhaps my hon. Friend did not, but he did not register his objection in the Lobby. But the Conservative Party officially welcomes the Giro, since anything which makes for convenient circulation of money without bank notes having always to be bandied about is an advantage.

Equally, as the Financial Times article says: The planner's original projection was obtaining … a target of 1.2 million accounts within five years. I should have thought that was a reasonable target. I do not know how the poor man in charge is expected to reach the target of one million within a year. The Postmaster-General should "pipe down" on this. Let the Giro earn its way. He should not spend another £500,000, as he intends to, on Giro publicity. Let him prove that the services it offers are wanted.

He will do very much better by being rather less effusive in his publicity. I refer to his speech today. We are very impressed by the work of the Post Office. No one who has seen the Post Office organisation fairly close at hand, either as a member of the Select Committee, or even on the Standing Committee considering the Post Office Bill, can but be impressed by the vast amount of services carried on in an efficient fashion. At the same time the Postmaster-General addresses the House as if we were to be sent out as salesmen, engaged on a "hard sell", selling some special type of remedial drug.

This was the tone of his address to us. It did not attract much support from his own benches—even the hon. Member for Coatbridge and Airdrie has deserted him. The right hon. Gentleman is under pressure, and he has an awful lot of things on his plate.

I hope that he will take an afternoon off and ask himself whether the explosively exuberant terms in which the Giro was heralded have been justified and whether it would not be more sensible to let it find its way into the various banking devices which are used in this country. We appreciate the work of the Post Office, and the burden falling on the right hon. Gentleman. We wish that he was just that degree more capable of dealing with it.

5.4 p.m.

Mr. Ray Mawby (Totnes)

My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) has much more experience than I have about the Giro. I am very concerned about this, and am on record as having said that I do not believe that we should have a Giro system here. When I was Minister I turned the thing down, on very good grounds, and I still believe that we are really throwing good money after bad by continuing to support this system. A longer time, however, must be allowed to elapse before we can make an independent assessment as to whether the right hon. Gentleman is right or whether I am right. I will, therefore, say no more about that now.

The hon. Member for Coatbridge and Airdrie (Mr. Dempsey) raised two points. One was about telephone kiosks. It is fair to say that the Post Office has tremendous difficulty over this. While they fulfil a social need, they cost the Post Office a considerable amount of money per annum, even without vandalism. This money has to come from other services, and we must remember that, when we are for ever asking the Postmaster-General to increase the number of kiosks, we are putting an additional burden on other Post Office services.

The hon. Member's second point was about shared telephone lines. The right hon. Gentleman tells us that the waiting list will be virtually eliminated over a short period of time. We all know of constituents who have had an exclusive line, and then suddenly have been told that they must have a shared line, and if they do not accept that they will be disconnected. This is one of the powers which the G.P.O. has, which no other organisation has. It has these dictatorial powers, whereby it can say, "You have had an exclusive line for a number of years, but you must now accept a shared line or we will reserve the right to cut you off." I have been treated courteously by local telephone managers, who have told me that they have this power, but that they prefer to do these things by agreement, and do not want to exercise such dictatorial powers. Nevertheless, they are there and are used from time to time.

Can the right hon. Gentleman say by how much the waiting list for telephones has been reduced as the result of increasing the service, and by how much it has been reduced as a result of the service being priced beyond the reach of those who want a telephone? How many people have now fallen out of the waiting list because of the various charges now made, which are at such a level that they cannot afford it?

The Postmaster-General told us about the marvellous new technological advances being made at Dollis Hill. No one who has visited Dollis Hill would question this. We have all been impressed by the great inventive genius, but all the new ideas put forward continue to remain ideas. They are not put into practice. The push-button dialler was developed many years ago, but it is still as far away as ever for the ordinary subscriber. The development of the laser beam into a positive process has still to come. The right hon. Gentleman's speech was very much a promise of jam tomorrow rather than anything today.

The Postmaster-General referred to developments in Washington new town. From the answers to questions in the House and from statements by the right hon. Gentleman and the discussions in Committee it has become obvious that the Post Office is interested in providing a service which will enable householders in future to be supplied through one conduit with a complete service in which he will receive television and have his meters read and so on. This is something which we all dream about and it will obviously reduce costs all round.

But my information is that in Washington new town the Post Office has simply gone into competition with existing relay services. The existing relay services, which have been established for many years, obtained their franchises by tendering for supplying wire services to the area. These services operate in many parts of the country. Householders pay a rental and no longer have "Christmas trees" on the tops of their chimneys making them worry when the wind blows that the structure may fall down, break the slates and come through the roof. That is one of the reasons why people are happy to pay rental for wire services.

My latest information is that the Post Office has merely provided a service similar to that which the commercial companies provide. The difficulty is that the Post Office is in a much superior position to the private enterprise company which has to ask the Post Office for a licence to continue its services. The private enterprise companies, therefore, have to ask their main competitor for a licence to continue in business. That is not in line with the normal standards of British justice. I will not develop this further, because, although you have allowed wide latitude, Mr. Speaker, it would be wrong for me to do so. Nevertheless, this is a consideration in deciding whether to agree to a Motion seeking to increase the borrowing powers of the Post Office by no less than £450 million.

That brings me to my second point, which is that we have to ask ourselves from where this money will come. Now and again it is important for hon. Members to ask themselves this simple question. This will increase the Post Office's indebtedness to the National Loans Fund. Where does the Fund obtain the money which it is to make available to the Postmaster-General? We know full well that it will come from increased taxation. The only other way would be for the Treasury to be able to convince foreign investors that it was such a solid organisation that people should lend it money, and under the present Government we have worn out our welcome in that respect and I doubt whether a penny of this money could be borrowed from hard-headed foreign investors. The additional £450 million will therefore come mainly from increased taxation.

In this country we have always operated on the basis that no one should be called upon to pay for something until he receives it. If somebody wants to buy a new refrigerator, he does not pay the company the price of the refrigerator and then wait until the company has built its factory, installed its machinery and made and supplied the refrigerator. We would expect risk capital to be used to build the factory and machinery and to produce the article, and to pay only when the article had been made available. This is true of services, too. We expect to pay only when the services are made available. However, as most of this money is to come from the taxpayers, there is a great danger that we shall be paying for services which we shall not be enjoying at that moment, that we shall be providing capital investment for services which we or our children may enjoy only in future.

There is no reason why we should be called upon to do so. If the Post Office, certainly when it becomes the Post Office Corporation, put its house in order, there would be no reason to use these extra borrowing powers. The sum involved could easily be covered if the Post Office accepted the simple facts of life. It ought to concentrate on the job it should be doing. For instance, it ought not to be spending £35 million on data processing. Certainly it should concentrate on data transmission and it should produce the equipment necessary to do so, so that it can transmit data from A to B as fast as possible. The British Post Office probably leads the world in the methods of data transmission, but it is not its job to indulge in data processing. It is not part of its job to install computers in which to process data for outside customers. The Post Office has lost its sense of priority in this respect. It should concentrate on data transmission and leave data processing to those who understand it better and who would be prepared to use their risk capital.

Secondly, with the tremendous increased demand in trunk services, the Post Office could reduce its capital indebtedness and continue to provide a service if it were prepared to accept the facts of life. People in many large blocks of offices with over 50 telephone extensions would be happy to go to a telephone rental system and say, "Will you install a modern, internal system? We shall call upon the Post Office to connect only 6, 8 or 10 trunk lines at the portals and as long as the Post Office is satisfied that the system conforms to its very high standards it will accept it". A large amount of capital can be tied up in this sort of installation. There is no reason why it should happen, because if the Post Office concentrated on trunk lines and main switchgear, it could concentrate its capital where it mattered. It would also give people who wanted to provide a service and to invest money the opportunity to do so.

The Postmaster-General has referred to international dialling and micro-circuitry. He said that in these respects British manufacturers were in the forefront. They are. But I do not think that there is one British manufacturer of telephone equipment who is completely happy with the present set up. How many manufacturers in this country have been called upon by the Post Office to produce a complete telephone? Many manufacturers are running virtually two entirely different manufacturing and assembly lines—one for export and one for the home market. A great deal can be done here, and I have high hopes of the Corporation because it will look at the matter more on a commercial basis.

The points which I have made are designed to show that the Post Office could, if it looked at the picture properly, ensure that it would not need to put this additional £450 million burden on the taxpayer. With readjustment, most of it could be laid in a different place. A great deal of risk capital would be happy to come into this field if it had the opportunity to do so. The Post Office should not enter fields which are nothing to do with it and in which other people can do much better. I mention the Giro system and data processing. It is wrong for the Post Office to insist that the consumer, whether he wants one telephone or 100 telephones, must conform to the Post Office pattern. He should have some say in the service that he wants. Obviously, the contractors supplying him would have to meet the requirements of the Post Office; that goes without saying. But that does not happen. Even if the invention meets all the specifications of the Post Office, something may happen and it is not developed. There was reference in Committee—and I do not know how far this matter has gone since we discussed it here—to the G.L.C. tendering for its automatic equipment. British manufacturers still say that the Post Office would not allow the Swedish company to install the type of equipment which it wishes to install. I am going only by what people tell me. This is one respect in which we should make matters clear.

A great deal of rethinking must be done. If it is done, it can only result in a much more efficient system at a lower cost to the taxpayer.

5.25 p.m.

Mr. Kenneth Baker (Acton)

I welcome this opportunity of having a wide-ranging discussion of the general financial policy of the Post Office. Normally debates on the Post Office take place on Supply days and are in the nature of censures on the Postmaster-General, admittedly well deserved in most cases. But this limits the discussion, and we have an opportunity only about once every two years to discuss the general financial policy when we consider the borrowing powers. We are being asked today—and it is regrettable that so few hon. Members are present—to increase Government expenditure and to give them the right to spend another £450 million, which is an enormous sum of money. As the Postmaster-General said, we shall not be discussing the general policy of the Post Office probably for another two years. We look forward to the contribution which he will then make to the debate, although we appreciate that it will be made from these benches.

We have had very interesting debates on the Post Office Bill in Committee. We have found out a great deal more about the investment intentions of the Post Office. Some of them have been published in the White Paper "Post Office Prospects 1969–70". I find this an appallingly depressing document. It reveals that over the last three years the profits of the Post Office have declined. In the year before last the profits were £44 million; last year they were £39 million; in this current year they will be £32 million. Only next year shall we get back to a reasonable rate of profit. As is so often the case with this Government, the improvement lies in the future. I am not at all confident that next year the Post Office will make the profit of £60 million forecast in the White Paper.

In the Post Office accounts presented to the House last summer, the Postmaster-General, under the heading of "Outlook", said that 1968 was to be a momentous year for the Post Office. We would all say "Hear, hear" to that. But the only momentous thing about the Post Office in 1968 has been the loss on the postal side. In the current year the loss will amount to £7 million. Only two years ago the services on the postal side made a profit of £7 million. There has, therefore, been a complete transformation from a profit of £7 million to a loss of £7 million.

What does the Postmaster-General propose to do about that matter? The root trouble was the inept way in which the 4d. and 5d. posts were introduced. But, apart from that, I am not sure that the system of 4d. and 5d. posts is right because it divides post on a time basis and it means that there must be a lot of people employed in the Post Office either pushing through the 5d. post or holding back the 4d. post. If the Postmaster-General denies this, there is no purpose in anyone buying a 5d. stamp. This cannot be the right system, and any businessman knows that it is not the right system.

There are three services on the postal side on which I hope the Postmaster-General will tell us what is the policy; they are inland parcels, the transfer of money, and telegrams. This year the inland parcels service will lose £3½ million; next year it will lose £5 million. Is the transmission of parcel traffic such a social service that the British taxpayers should subsidise it to the extent of £3 million to £5 million a year? The White Paper "Post Office Prospects" boasts proudly that the inland parcels traffic has maintained its share of the market; but by maintaining its share of the market it is losing £3½ million a year. There is a prima facie case for suspecting that it is maintaining its share of the market only by not charging enough. Will the Postmaster-General go on allowing inland parcels to lose this amount of money every year?

The services for the transfer of money lost £5 million a year. By the transfer of money I mean Giro, postal orders and money orders. Next year the service will lose £7 million. Are these services of such an important social nature that the British taxpayer should subsidise them to the extent of £5 million or £7 million a year, or should people who buy postal orders for pools or whatever it may be pay more for their postal orders? Should people pay more for money orders? This year the Giro will lose £2 million, next year £4 million. We must have a clear statement of policy from the Postmaster-General as to how long will be the trial period of the Giro. My own feeling on the Giro is a not proven verdict and we should give it a little longer. But we cannot write a blank cheque, and if the Post Office is losing as much as this, we have a right to know when it is likely to stop losing this amount of money on the Giro.

The telegram service is a dying one. After the war there were about 60 million telegrams a year, and now we are down to about nine million a year. The loss on the telegram service is between £2 million and £3 million a year. The average cost of each telegram is 13s. 8d., the average income is 8s.; so on every telegram that is sent the Post Office loses 5s. 8d. The crucial question is: to what extent is the telegram service a social service? I do not believe, for example, that greetings telegrams and business telegrams are a social service, nor bookmakers' telegrams, although they have to get there on time. But I do believe that the life and death messages which constitute about 100,000 a year are a social service, and if such messages cannot be delivered by telephone some other way has to be found. This service loses £3 million a year.

If all these services could be made profitable, or at least could be made not to run at a loss, the Post Office would be about £14 million a year better off. This would be a substantial saving, and I hope that the Postmaster-General will make a clear statement of policy.

Earlier today the Postmaster-General and I were guests at a lunch at which he made a stirring speech, his usual "box of tricks" speech. All these clever inventions we shall have in the next few years were dangled before us, in spite of these enormous losses. He said, and I took down his words, "This is not a time for speculation; it is a time for action."

Mr. Stonehouse

My actual words were, "This is a time not for exhortation, a time for action."

Mr. Baker

That is even better. I hope we shall not be exhorted by the Postmaster-General. We do not want any of this "Dunkirk" stuff such as we had today. We should like to know from the Postmaster-General what he intends to do about these loss-making services of the Post Office. I said that there might be a social case, but if there is one, let us have it argued. I have concentrated upon this aspect because it is crucial to the Post Office that it should improve its profitability.

I paid generous tribute to the investment programme of the Post Office during the passage of the Post Office Bill in Committee. I accept that it has been increased substantially. About £1 million a day is now spent by the Post Office on capital expenditure. With a programme like this a larger proportion of that capital expenditure must come from the Post Office itself. How would a large company faced with such a capital programme finance it? To begin with, it would look at its overheads and costs. On the last page of the recent White Paper there is a list of the staff which shows an increase of 8,000 during the present year. In a year when the Post Office will lose an extra £7 million, there is to be an increase of staff of 8,000. It is not the operatives who are being increased, it is the administrative staff, and the biggest increase comes under the heading "Cleaners, etc". There are to be an extra 1,500 cleaners and etceteras. Can this be the heading under which appear the great army of public relations officers which has been taken on by the Post Office?

A private company would consider where staff can be saved. A private company would also try to make its assets spin a little more quickly. The Post Office is a major landlord. It owns magnificent sites in the high streets of every town and village in this country. Would it be possible to approach some pension funds on a sale-and-lease-back operation. In this way one could generate hundreds of millions of £s.

What are the other assets of the Post Office? I read in a newspaper during the weekend that the Post Office had a magnificent collection of old stamps. There is one coming up for sale tomorrow at Stanley Gibbons, an Edward VII 2d. Tyrian blue, which is expected to be sold for over £2,000. This stamp was to be issued on the day on which Edward VII died, but was never issued. I understand that the Post Office owns 239 of these stamps. It will not take hon. Members long to work out that 239 valued at £2,000 each comes to £½ million. The Postmaster-General could not sell these stamps immediately, as by doing so he would ruin the market, but he could do a phased marketing. It is no purpose of the Post Office to be the proud collector of valuable old stamps which it could be turning into money. This is just one small way in which the Post Office could be helped.

The capital programme of the Post Office is £1 million a day for the next five years. I pay generous tribute to the fact that that is a good capital programme, but I have argued before and I will argue again today that it is not enough. It is one-tenth of what is being spent in America. I am sure the Postmaster-General would be only too eager to spend even more if he could lay his hands on more money, but how is this capital programme, or a bigger capital programme, to be financed?

The Post Office proposes to finance half from internal sources, profit and depreciation, and half from borrowing. This balance, in my opinion, is wrong. The 50 per cent. from borrowing is far too high a proportion. When the Post Office Bill went into Committee the interest rate in the London gilt-edged market was about 8 per cent.; when it came out of Committee it was 9 per cent.; I dare say that when on 1st October the Post Office Corporation becomes a nationalised industry the interest rate will be 10 per cent. One does not know what will happen to the interest rates next year. Interest rates are important. If the interest charges for this vast amount of money which is to be borrowed go up and up and up, the capital programme will have to be cut and cut and cut. There are no two ways about that. The Post Office must tap new sources of capital. What are these new sources of capital? I believe that it has to tackle the private market more effectively.

I have argued in Committee that I would favour a system whereby the British public has a chance to make a direct investment in the telecommunications side of the Post Office. I believe that a B.P.-type arrangement would be very attractive. The one matter on which both sides of the House join is our desire for the Post Office to invest more and more. We are on the verge of a magnificent technological break-through, and the Postmaster-General touched upon it in his speech when he spoke of the possibility of computerised terminals in every home. However, the Post Office will not be able to do it without the necessary money, and no Postmaster-General of any party could come to the House and ask for these vast sums.

We are asked to vote a large sum today but, even when it is spent, only about 30 per cent. of homes in this country will have telephones. In America, 85 per cent. of homes have them. Even after ten years, only 60 per cent. of the homes in this country will have them.

This is the scale of the problem. It will not and cannot be met by Government borrowing in the gilt-edged market. One has to tap private capital. One has to go to the private investor and ask if he has the necessary confidence to invest in the British Post Office.

5.42 p.m.

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

I want to support my right hon. Friend in what he has said this afternoon.

I thought that the hon. Member for Acton (Mr. Kenneth Baker) made some very useful points. As he knows, hon. Members on this side of the House do not agree with his suggestion about raising capital in the private market. Although many of us have looked at the hon. Gentleman's suggestion since he first advanced it in Committee, I for one still think that it would be dangerous if the Post Office adopted it.

I think that it is important to know occasionally from right hon. and hon. Gentlemen opposite what they have in mind for the future of the telephone service. We have never had a clear answer from the hon. Member for Howden (Mr. Bryan). He wriggled in Committee, and I am sure that he will wriggle again if we press him.

The current account prospects given on page 9 of the White Paper are extremely interesting, and the hon. Member for Acton touched upon them. However, he made no reference to the most significant figure, which is that the two-tier postal service is expected to make a substantial profit this year and next year. He levelled a number of criticisms at my right hon. Friend and protested about the two-tier letter service. I would have expected some rather more generous comments from him because the service is an extremely good one. It is understood that 94 per cent. of letters posted are delivered the following day. But the majority of the remaining 6 per cent. are physically and geographically impossible to deliver. In addition, second-class mail reaches its destination in very good time.

Right hon. and hon. Members opposite are quick to criticise, but we have not heard a word of praise today for the way in which the service has settled down and looks set fair to make a reasonable profit this year and next year.

Mr. Bryan

How does the hon. Gentleman know what has been said in the debate?

Mr. Dobson

Unfortunately, I was slightly delayed in getting here today and missed the hon. Gentleman's contribution. If he said that he praised the two-tier letter service, I congratulate him on his conversion. It is about time. He has had plenty of opportunities to do it in the past, and I am delighted if he has done it today.

It is useful to study these figures because they indicate that the Post Office has made a number of changes, difficult though they were in the interim period, which have turned out well for the senders and recipients of letters, and for the Post Office as an organisation.

The hon. Member for Acton made rather heavy weather of Giro. He suggested that it had been introduced for an experimental period. However, he must know that that is not so. The service is a very useful one and, once it can establish itself firmly in the market, it will make substantial profits for the Post Office, even though it appears from paragraph 50 of the White Paper that it will make a loss this year and next year.

The setting up of a service of this kind involves a high capital cost, and we must allow it time to settle down in a very difficult market. It offers very important facilities, and it is one which we should all welcome. I know that the hon. Member for Totnes (Mr. Mawby) does not agree with me and has always taken a different view, but it is not shared by other hon. Members opposite. It is a service which the Post Office should have offered long before it did, and I shall be very pleased when it starts to make a substantial profit.

In that connection, I want to utter a word of caution to my right hon. Friend. I think that it would be better if his public relations department issued more information about Giro. I was engaged in writing an article recently and found it rather difficult to obtain answers to questions which I raised with the Post Office. This was particularly unfortunate as I was trying to praise Giro and not condemn it. It may be that the people to whom I spoke were not aware of my interest in it.

I want to turn now to the National Data Processing Service. It has been running for some time now and, in my view, has never developed properly and in the way suggested by the then Postmaster-General when he introduced the Bill which we discussed in Committee. I have always thought that it could develop into a very valuable service to industry, possibly to accountants, and to a wide range of people who are interested in using a computer system in a computer network; not wishing necessarily to rely completely on private bureaux and small networks of that kind.

I do not feel that enough push has been given to the Director of National Data Processing Service to get it off the ground and provide the viable and profitable service which it should offer. I hope that my right hon. Friend will look at this again and make sure that something is done to advertise its wares and concentrate on attracting business to it in a way which has not been attempted so far, much as has been done in the case of Giro.

The hon. Member for Acton spoke rather disparagingly about the increase in staff. He particularised cleaners, etc. The increase in the cleaning force has been caused by a change of policy. The Post Office has decided to change over from contract cleaning, which has not proved successful. Contracts were given to cleaning firms, and they resulted in a very low standard of cleaning in Post Office buildings. The increase is obviously due to the need for more cleaners to be used in keeping Post Office premises in good order.

As my right hon. Friend knows, there will be some further changes in staff when the Post Office becomes a corporation. In the last few days, I have tabled a number of Questions to him bringing to his attention one specific case of staff shortage which interests me. In that connection, I had better declare my interest, because I was in the section concerned.

The radio operators' section mans the 13 stations round our coast, contacting ships at sea with distress and personal messages and, through the station at Burn-ham-on-Sea, maintaining contact with British and foreign shipping throughout the world.

Burnham-on-Sea radio station has been suffering for some time from a shortage of staff. This is due to several reasons: uncongenial hours, low pay, and the kind of problems about which my right hon. Friend has heard before. But it has resulted, and probably could result, in certain services being withdrawn from that station.

One is the ship letter telegram service. I have put down a Question to my right hon. Friend about this. I do not expect him to be able to answer now, because I have not given him notice. I apologise for raising it in this way, but it seemed convenient to speak about it. I have heard rumours that the ship letter telegram service is to be withdrawn. This would be a pity and a great disservice to those who sail the high seas and those engaged in coastal water trade, because it is a cheap service for people at sea. Telegrams are received in the station and they go on their way by post, so it becomes a very cheap method for people at sea to keep in touch with their families ashore. There is a stipulated minimum of 20 words. I submit that this is a very valuable service.

Secondly, there is a development called high frequency radio telephone which has been talked about for at least 15 years to my certain knowledge. This has developed to some extent anyway. The equipment has been installed in Burnham radio station to enable it to control this type of service. It provides a telephone connection between ships at sea and their owners and others ashore. It is very valuable, therefore, for business and for private individuals.

This equipment has only recently been installed. The staff is not yet available to operate it. Once again, I do not expect my right hon. Friend to know about it at this stage, but I hope that he will look into it. It would be a very valuable asset and a money-making proposition for the Post Office. As it takes at least six months to train people fully to operate this equipment, there is an urgent need to look into the staffing of this radio station as soon as possible.

I suppose that this is probably the last "Post Office Prospects" before we start the Corporation. Therefore, it is opportune to hope that, under my right hon. Friend, the Corporation will be even more successful than the Post Office has been.

5.54 p.m.

Mr. Ian Gilmour (Norfolk, Central)

I think that we should all congratulate the hon. Member for Bristol, North-East (Mr. Dobson) on his productivity. Five minutes listening and a 12-minute speech is a better proportion than many of us manage to achieve.

Like my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) and others of my hon. Friends, I am sorry that the Assistant Postmaster-General is not here to wind up the debate in his usual way. We look forward to seeing him again after Easter.

When somebody wants a larger loan, his bank manager, or whoever the lender may be, is accustomed to scrutinising him and his past performance before he is prepared to shell out the money. It seems to me that at least some of the operations of the Post Office would not pass the scrutiny of a bank manager. If it came to the ears of a bank manager that one of his clients was a bit loose in his business practice, I think that he would either refuse the loan of more money or he would demand an assurance that this sort of thing stopped.

It seems to me that the right hon. Gentleman should look again at the advertising of his Department. It would be too much to call it fraudulent, but it is certainly misleading, and it has been misleading on at least three specific occasions. I do not know whether the right hon. Gentleman has done any television advertising lately. If so, I think it is time that the I.T.A. had a look at what is said.

We all know about the notorious two-tier post advertisements. I think that the Postmaster-General has recognised the justice of some of the criticism to the extent of sacking the advertising agent.

We have had the advertisement about Giro, Do not pay your bill, Giro it. That seems to imply that as a result of using Giro people do not have to pay their bills. I do not know of a more ineptly worded advertisement. It calls up reminiscences of the early days of Socialist finance: that the money would be found elsewhere.

We had the advertisement which seemed to suggest that telephoning is no more expensive than it was in 1934. That is a proposition to which very few would assent. Mr. Quintin Crewe, in his article in the Sunday Mirror of 16th March, said: All in all, I think it borders on the deceitful to suggest that the cost of the telephone service today can be compared in any way with 1934—except that it has multiplied about five times. That seems a just criticism of advertising.

The Postmaster-General has evidently spent a lot of money on advertising his wares, but it would be a brave man who suggested that the public's opinion of the Post Office was better as a result of the expenditure of this money than it was before. Indeed, I think that the standing of the Post Office in the eyes of the public varies almost in inverse proportion to the amount that the Post Office spends on advertising.

I think that a bank manager would have a look at the general public reputation of the borrower. In this case he would have quite a good guide to go by, because the Opinion Research Centre conducted a poll which was published in the Western Mail on 15th February. One question asked was: On balance, do you think that the Post Office is being well run or badly run nowadays? The answer was that 35 per cent. said well run, 57 per cent. said badly run, and 8 per cent. did not know. I imagine that that is a most distressing figure for the Postmaster-General to be told.

It is worth noting that in the same survey people were asked: If the Post Office was denationalised and run as a private enterprise by a commercial company, do you think it would probably be run better or worse than it is now? No less than 45 per cent. thought that it would be better run, only 22 per cent. thought that it would be worse run, and the remaining 33 per cent. said that it would make no difference or that they did not know.

The increase in the number of public relations officers, which has risen from 51 to 98, does not seem to have made a great deal of difference so far to the reputation of the Post Office. Neither that nor advertising seems to have been very successful.

Incidentally, the Postmaster-General's attitude to advertising is a little odd. He extols the advertising of his Department. He did so today. He said that spending £300,000 would cause a great saving in the Post Office. But the only advertising of which he seems to approve is that done by his Department. When reference is made to advertising by private companies and when it is suggested that it would be a good thing to finance local radio by advertising, he says that advertising is not free and that it adds to the cost of the product. Will he say that it adds to the cost of his Department's product and service? The right hon. Gentleman must make up his mind whether he thinks that the cost of advertising is added to the general cost to the consumer or that advertising saves money.

Mr. Stonehouse

The particular advertising to which I was referring was designed to secure more efficient use of the system as a whole. I gave the House details of the net additional turnover which we should obtain from it.

Mr. Gilmour

But so much advertising is designed to increase the sale of a particular product, so that the same considerations apply. I do not think that the right hon. Gentleman has succeeded in producing a valid distinction.

A bank manager would also want to know how accurate the forecasts made by his customer were likely to be, and he would look at past performances. I think that he would be shaken to read the words of a by no means unfriendly critic, in this case, the P.I.B., which said: There is clearly no basis in the market research results for the assumptions on which the Post Office has made its financial forecast. I agree that that did not apply to all the operations, but it is nevertheless not a very kind comment. It seems as though the right hon. Gentleman and the Post Office were caught off balance by the two-tier postal service. We read that a £4 million cut had to be made in expenditure, and that the receipts from the two-tier system were much lower than they were expected to be.

Most important of all is the question of the proportion of capital expenditure to be financed from inside the Post Office. The proportion has gone steadily down over the last few years. In 1962–63 it was 70 per cent. In 1965–66 it was 57 per cent. In 1966–67 it was 52 per cent. In 1967–68 it was 42 per cent. It seems likely that it may be only 36 per cent. in 1968–69. It is forecast to be 49 per cent. In 1969–70, but in view of the trend, and in view of the continual fall, there must be some doubt whether that target of 49 per cent. of capital expenditure is likely to be achieved or whether it will be like all those forecasts of a balance-of-payments surplus of £500 million which we hear from the Chancellor every year.

This is an especially vital matter because the amount of finance which is not raised from the Post Office internally is paid directly by the taxpayer, and £200 million extra is by no means a trifling sum. It should therefore be incumbent upon the Postmaster-General to do all that he can to find alternative sources of finance and to allow services or functions which can be run better by other people to be run by other bodies. Unfortunately, however, as we discovered in Committee, the Postmaster-General is so obsessed by his monopoly, and is so intent on hanging on to it, and indeed on extending it, that he has closed his mind to these important considerations and is prepared to let the taxpayer go on footing the bill. Until the right hon. Gentleman changes his mind, and until his administration improves, the popularity of the Post Office will continue to be low, and the Postmaster-General can only be grateful that he is not subject to the normal financial disciplines provided by a bank manager.

6.4 p.m.

Mr. Stonehouse

I am most grateful—

Mr. Speaker

Order. The right hon. Member needs the leave of the House to speak again.

Mr. Stonehouse

May I seek the leave of the House to speak again?

I was most grateful to the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) and to the hon. Member for Norfolk, Central (Mr. Ian Gilmour) for what they said about my hon. Friend the Assistant Postmaster-General. I shall convey their observations and those of the House to him. We all look forward to seeing my hon. Friend back here soon.

This has been an interesting, if short debate. I want to start by dealing with some of the misunderstandings which seem to lie in the mind of the hon. Member for Howden (Mr. Bryan), and that of the hon. Member for Totnes (Mr. Mawby). They spoke about the losses of the Post Office, and went on to talk about the burden on the taxpayer. What they do not seem to realise is that the figures shown in paragraphs 49 and 50 of the White Paper, Post Office Prospects, represent the position after interest charges have been fully met. On the post side of the business, the figures shown in paragraph 50 are arrived at after the post side has paid interest charges at the appropriate rate on the money borrowed from the taxpayer of £8 million, and has arranged and allowed for a £0.7 million supplementary depreciation so that there is actually not a loss but a return of 1.7 per cent. on investment.

Furthermore, as is indicated at the bottom of paragraph 49, and at the bottom of paragraph 30—and I draw the attention of the hon. Member for Acton (Mr. Kenneth Baker) to this, because he made disparaging remarks about the fruits of profitability in the last few years—we have this year adopted a new practice of charging to current expenditure certain costs which before were not so charged, so that the profitability is reduced by nearly £9 million this year.

Mr. Bryan

Is the right hon. Gentleman saying that the figures for 1968–69 in paragraph 50 are not comparable with the figures in the Report and Accounts for 1967–68?

Mr. Stonehouse

I am not suggesting that. I am saying that a cursory reading of the White Paper might give the impression that the figures arrived at in paragraph 50 are the figures before interest charges have been paid. If I might take up the point made by the hon. Member for Norfolk, Central, a bank manager would pay a great deal of attention to his customer's ability to pay the interest on the money that he borrows, and the Post Office is paying the full interest. There is no question of any of the accumulated debt of the Post Office being wiped out, as has been the case in a number of authorities. We are fully able to meet these charges, and we intend to meet them in the years ahead.

Mr. Ian Gilmour

The taxpayer finds the capital. We are not complaining about the Post Office not paying the interest.

Mr. Stonehouse

But it is an exaggeration to talk about this being a burden on the taxpayer, because the going rate of interest is being paid.

The hon. Member for Howden asked me a number of questions. He said that inland parcels and postal money orders were showing a loss, and asked what we intended to do about it. As I said when I introduced this document to the Press a week or so ago, we are considering what action we should take about this loss. I was grateful to my hon. Friend the Member for Bristol, North-East (Mr. Dobson) for drawing the attention of the House to quite remarkable successes, considering the effects of the industrial dispute and the drop in traffic since the increase in charges last year with the two-tier system. I was surprised that the hon. Member for Howden, who devoted a considerable part of his speech to discussing paragraph 50, did not draw attention to the fact that despite the effects of the industrial dispute, and the drop in traffic, which combined caused a loss of about £5 million, the two-tier system is showing a post two-tier profit this year of £3½ million, compared with a pre two-tier position of a loss of £4 million.

Mr. Bryan

But does the right hon. Gentleman think that the drop in traffic has nothing to do with the early chaos of two-tier?

Mr. Storehouse

I believe that the drop was due to the increase in charges, and we are expecting to recover the position towards the end of this year. To have made a surplus despite, particularly, the effects of the industrial dispute, which, together with the inland parcels effects, cost us about £2 million, is reasonably satisfactory.

My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) raised some fascinating questions, to which I gave a good deal of attention. A number of hon. Members have mentioned shared telephone lines. These have been with us for about 20 years and it is our eventual aim to eliminate the shared service and certainly the idea of obligatory sharing. There is a shortage of exchange equipment, and as soon as we have dealt with that, we hope to eliminate the need for sharing lines. But I was surprised that the hon. Member for Totnes (Mr. Mawby) made such a song and dance about this, because, when he was Assistant Postmaster-General, he was party to imposing the very sort of conditions which we are now having to impose so that we can connect as many potential subscribers as possible. This is a system which we hope will be gradually eliminated, and we regret that we have to adopt it.

I agree with my hon. Friend that vandalism to our kiosks is very serious. In some parts of the country, particularly the East End of London, the situation is deplorable. I wish that there were some way of preventing this. Certainly, through the steps which we now take, I hope that it will be ameliorated. My hon. Friend suggested public kiosks being in private houses or private gardens. I will consider that suggestion, but we are already arranging for these call extensions to be available in hotels, public houses, launderettes and other such establishments, where they provide a useful convenience for customers.

Mr. Dempsey

Has my right hon. Friend any comment to make on my question about the 24-hour radio service?

Mr. Stonehouse

I will consider all these points. They are questions for the B.B.C., which I will ensure is made aware of them.

The hon. Member for Acton talked about the two-tier service being the wrong way to plan a postal service. He thought that we should deal with the post all at the same time and not separate it into fast or slower streams. What he does not seem to realise is that there is a very serious problem in dealing with the peaks between four and seven o'clock in the evening, when 75 per cent. of the mail is pushed through the boxes and into the sorting centres. It was a physical impossibility to cope with this buildup and that was the reason for two-tier—to enable the customer to choose the priority for his mail and to enable us to give priority to first-class mail.

Mr. Kenneth Baker

The right hon. Gentleman will remember that, when the system was introduced, many suggestions were made, particularly from this side of the House, that one way of getting over this blockage, which was accepted, was to deliver the next day all letters posted before, say, one or two o'clock in the afternoon and to say that, of letters posted later in the day, some would and some would not be delivered the next day.

Mr. Stonehouse

That is extraordinary. The hon. Gentleman is suggesting that there should be an extreme deterioration in the service which we now provide. As my hon. Friend the Member for Bristol, North-East said, we have this remarkable performance of 94 per cent. of first-class mail delivered the next day, which is better than in any other country. The hon. Member's suggestion is that we should allow the service to deteriorate to the extent that any mail posted after one o'clock should not be delivered the next day. This would not only be most awkward for ordinary customers but would be a severe embarrassment to business houses which have come to rely on next-day delivery of mails posted as late as six or seven o'clock in the evening. It is extraordinary that hon. Members opposite, who continually attack us for the alleged deficiencies of the postal service, should now suggest that the way in which they would handle this situation is to impose that sort of restriction. I hope that the public will note it.

The transfer of money is an expensive service because postal and money orders demand a great deal of staff time. We expect that, in due course, the Giro will increasingly take over the function of these services, but it was always expected that Giro would incur a loss in the first years. As a new service, it could not be built up into the number of accounts which would make money for it within the first year. We are now expecting that, in two years, we shall break even and then begin to make a return on our investment.

Although we are not yet receiving the number of accounts which were at one time optimistically expected, we are increasing them at about the rate of 2,500 a week and we now have about 100,000. It is interesting that many business houses, particularly insurance and mail order firms, have taken over Giro accounts and are using them for in-payments by their various agents around the country. A total of 250,000 transactions was recorded in the last week of February and the number is increasing. Given time, I believe that Giro will build up, as it has in other European countries, to a valuable system of transferring money.

My hon. Friend raised the question of the N.D.P.S. development. I assure him that we are anxious that this service should be developed. We look forward shortly to N.D.P.S. securing a good contract outside the G.P.O. I will look into his question about the ship service.

The hon. Member for Norfolk, Central accused us of misleading advertising and chose as an example the advertisement quoting the cost of a telephone conversation to anywhere in the United Kingdom for three minutes at 1s. This compares—I challenge the hon. Gentleman on this—with 1s. charged in 1934. It is the identical charge, although the value of a shilling in 1934 is about 4s. now. We are entitled to boast about this great achievement—the fact that, through this tremendous investment in the S.T.D. system and through holding down charges at off-peak times, we can provide a service for customers at the identical cost charged in 1934.

That is not misleading advertising. I assure hon. Members that I take a close interest in our advertising and the advertising that we are planning because it is important that it should be closely geared to the marketing job which we are trying to do. I believe that in the next 12 months we shall be able to use advertising as an important tool to make our service more effective.

The hon. Member for Howden wondered what proportion of the development programme was being financed from our own resources. In this financial year the telecommunications business is financing 43 per cent. of its activities from its own resources and, overall, the figure is 39 per cent. We are expecting, over the whole five-year period, to finance about 50 per cent. of the £2,000 million development programme from our own resources, and I suggest that that is a satisfactory split to achieve.

Mr. Bryan

Would the right hon. Gentleman comment on the figure of £9 million which it will cost in overheads to change over to the Corporation?

Mr. Stonehouse

I do not understand the significance of the hon. Gentleman's intervention in connection with the figure of £9 million. We pointed out in the White Paper that charges are now being made to current account which in past years were not made to that account. It would have been possible to have spread these charges over a number of years, but, as we have indicated, we are charging them to current account, which is a more advisable procedure, certainly from the point of view of preparing for the situation which will exist from October onwards. For this reason the profitability figure is about £9 million less than it would have been.

Mr. Kenneth Baker rose——

Mr. Speaker

Order. We have already had two perorations.

Mr. Baker

That is true, Mr. Speaker, but I have not had any answers.

Would the right hon. Gentleman comment on my remarks about the loss-making services of inland parcels and telegrams?

Mr. Stonehouse

On the parcels side, we are considering what to do about the charges. On the telegrams side, we shall be considering what action should be taken, and I am sure that the observations made by hon. Members today on these matters will be most helpful.

Question put and agreed to.

Resolved, That the Postmaster General be authorised, as provider 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, 1970.

Resolved, That the limit of the Postmaster General's indebtedness to the National Loans Fund under section 10(2) of the Post Office Act, 1961, as amended by section 1(1) of the Post Office (Borrowing Powers) Act, 1967, be increased from one thousand seven hundred and fifty million pounds to two thousand two hundred million pounds.—[Mr. Stonehouse.]