THE POST OFFICE'S BORROWING POWERS (Hansard, 12 May 1969)

§ Mr. Stonehouse
I beg to move Amendment No. 107, in page 38, line 7, leave out from "Office" to end of line 12 and insert: , with the consent of the Minister, may, from such person and on such terms as he may, with the approval of the Treasury specify, borrow, in a currency other than sterling, any sum which it has power to borrow in sterling from the Minister". Clause 35(3) will allow the Post Office to borrow foreign currency, but there is no provision for the Post Office to borrow foreign currency temporarily. There has been some experience of borrowing abroad, for instance, in Germany by the Gas Council. It has become clear that the practical operation of the capital borrowing powers would be helped by a power to borrow temporarily, and the effect of the Amendment is to give the Post Office this power. The gas and electricity authorities already have such a power. It will be seen that this borrowing will be under the full control of Ministers. The Government would authorise temporary borrowing only as an adjunct to the long-term borrowing powers. I hope that the Amendment will find support in the House as an improvement to the existing powers in the Bill.

§ Sir H. d'Avigdor-Goldsmid
I wish briefly to intervene on this point, because with previous nationalised industry borrowings abroad, particularly in the case of airlines, they were earning foreign currency. The problem of repayment was not acute because it came out of foreign currency earnings.
There are no circumstances which one can contemplate in which the Post Office is liable to earn any substantial sums in foreign currency. Therefore, the payment 1114 of foreign currency will not fall on the Post Office but on the Exchequer.
This is a peculiar form of borrowing. Indeed, is not the Post Office endangering the credibility of this country if we are borrowing on the security of the telephone service and similar assets? This is really Government borrowing and I see no point in our discussing it in terms of Post Office borrowing. In any event, how will the Post Office be able to repay these sums out of its foreign currency earnings?

§ Mr. Stonehouse
I am grateful for the hon. Gentleman's comments, because they enable me to reply that the Post Office spends about £5½ million abroad each year. This is expected to be continuing expenditure. There is, for example, Post Office investment in Intertel and various submarine systems. It is, therefore, appropriate that the Post Office should be able to borrow abroad, as is suggested in the Amendment. The Corporation Bill benefit in being able to borrow abroad at rates of interest lower than those at present applicable in the United Kingdom.

§ Mr. Ridley
I beg to move Amendment No. 108, in page 38, line 12, at end insert: Provided that the total amount of such borrowings outstanding at any time shall not exceed ten times the net average annual earnings of foreign currency of the Post Office over the previous three years. This Amendment bears strongly on the comments made by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) on the last Amendment in that the Post Office should have foreign earnings to pay for its borrowing abroad. My proposal would require the Post Office to have at least one-tenth of the amount that it borrows in foreign earnings.
The Postmaster-General said that the Post Office at present spends about £5½ million a year abroad. Such a statement does not add strength to his claim that it should be able to borrow abroad, for the only possible justification for this sort of bogus commercial borrowing is that the concern is a large earner of foreign exchange, like the two air corporations. The right hon. Gentleman should not try to pretend that the running 1115 up of a bill abroad of £5½ million is a commercial ground for allowing the Post Office to borrow foreign exchange.
As my hon. Friend the Member for Walsall, South, said, if the Government wish to borrow abroad, they should do so in their own name and not in the name of a nationalised industry such as the Post Office. This stupid pretence at commercialism should not be allowed, particularly at a time when the country is in such a financial mess.