HC Deb 17 November 1971 vol 826 cc424-8
The Minister of Posts and Telecommunications (Mr. Christopher Chataway)

With your permission Mr. Speaker, and that of the House, I should like to make a statement about the Post Office Giro.

The Giro lost £6 million in 1969–70 and again in 1970–71, though it made some offsetting contribution to the fixed overheads of the Post Office. I have, therefore, undertaken a review of the service in consultation with the Post Office Board and with the assistance of Cooper Brothers who advised against closure and made a number of recommendations for changes. The Post Office agrees that there should be a substantial reshaping of the service, involving strengthened management, improved financial control, changes in marketing policy and, in due course, a revised tariff structure. On this basis it believes that Giro can be made to pay and can offer a competitive service to the public, to commerce, to local authorities and Government, as well as a means of modernising the Post Office's facilities in money transfer. In the light of this and the consultants' views, the Government have accepted the Board's conclusion that Giro should continue.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call first the hon. Members who have Questions on the Order Paper about this matter.

Mr. Bruce-Gardyne

Will my right hon. Friend explain precisely how this decision is to be reconciled with the intention of the Conservative Party to ensure that creeping nationalisation is not continued by the subsidisation of activities in competition with the private sector out of the proceeds of a monopoly nationalised industry?

Mr. Chataway

There has never been any suggestion by the Government that the Giro was an inappropriate service for post offices to run; indeed, most post offices in Western Europe do so. Equally, we would not be authorising the Giro's continuance if the studies and the consultants' report to which I have referred had not led to the conclusion of the Post Office that this service can pay its way, and it is on that basis that its progress will continue to be monitored.

Mr. John D. Grant

I congratulate the Minister on rescuing this excellent public service from the attentions of his backwoodsmen on the Front Bench and the back benches opposite—we have just had a good example of that. I hope that this means that the threat to jobs has now ended. In view of the damage that has been done to the service by the uncertainty of the past year, will the Minister extend the period to be allowed for the service to become viable, and by how long? Further, what steps will he take to allow more Government business to be done by the Giro so that it gets a fairer chance of financial success?

Mr. Chataway

I am grateful for the hon. Gentleman's congratulations, but no rescue operation would have been necessary if the Giro had been launched on a more reasonable basis. It is the serious errors that were made, to which the inquiry has pointed, which have led to the severe difficulties which the Giro has faced. The new management, in implementing the recommendations to which I have referred, will set new targets in consultation with me. The Government will deal with the Giro on the same basis as they deal with other services, and will be prepared to use the Giro where it is considered to be in the best interests of the Department concerned.

Mr. Rost

Is not my right hon. Friend's statement an admission, if ever there was one, that the State is not a suitable body to run a commercial enterprise such as the Giro.—[HON. MEMBERS: "What about Rolls-Royce?"]—Instead of making proposals to run down the Giro further, is not this an appropriate moment for the Minister to tell the House that he is prepared to consider selling off the Giro to privaite enterprise so that it can be run efficiently as a commercial success?

Mr. Chataway

For a number of reasons this is not an enterprise which could be hived off in any shape or form. I believe that the majority of my right hon. and hon. Friends would not wish the Government to approach this issue in a doctrinaire way. Faced as we were with a service over which serious errors had been made, I believe my hon. and right hon. Friends would wish the Government to commission the advice of independent consultants and then to act upon it, as we have done.

Mr. Simon Mahon

May I express to the right hon. Gentleman my profound relief that the jobs of 3,000 of my constituents have been saved? I am most grateful. Merseyside could not have stood it within the framework of 51,000 unemployed. I also express my gratitude to him for his courtesy over a long period. Would he not say that the patience and loyalty of the employees of Giro needed to be recognised; and may I take it, since he did not mention redundancy, that there will not be any in the reorganisation?

Mr. Chataway

There are no proposals for redundancies. I am grateful to the hon. Gentleman for his advice over a long period, and I appreciate his concern in this matter. Despite the serious errors to which I have referred, a great deal of energy and idealism has been invested in this enterprise in total.

Mr. Richard

We on this side of the House understand that the Minister has to try to, placate some of his hon. Friends. In view of what we have been saying for about 12 months, I now say to the Minister, "Thank you very much. It is a pity you did not do it earlier."

Mr. Chataway

All I can say to the hon. Gentleman is that it is a great pity that the Giro was launched on the basis of hopelessly optimistic estimates of business, and that investment was undertaken on the basis of a million accounts at the end of a year. If it had not at some point fallen under the baleful influence of the right hon. Member for Bristol, South-East (Mr. Benn), with his particular mixture of Socialist euphoria and self-deception, we should not be in this difficulty.

Mr. Stratton Mills

Is my right hon. Friend aware that there will be great sympathy for him in having to sort out yet another error of judgment and management of right hon. Gentlemen opposite. To put this matter in context, will my right hon. Friend say how many jobs would have been lost in a development area if this service had been shut down, and what would have been the cost of shutting it down?

Mr. Chataway

The costs involved in closure would have been very substantial, perhaps about £12 million. About 3,500 jobs would have been in jeopardy in Bootle.

Several Hon. Members

rose—

Mr. Speaker

The matter cannot be debated now.

Sir G. Nabarro

On a point of order. In view of the wholly unsatisfactory replies, I beg leave to give notice that I shall raise the matter at the earliest moment to the detriment of the Minister.