HC Deb 11 July 1973 vol 859 cc1743-50

9 a.m.

Mr. Russell Kerr (Feltham)

I wish to draw attention to a practice which many people in Feltham regard as showing a humiliating and wrong-headed attitude on the part of the Post Office towards prospective renters of telephone equipment, namely the policy of demanding from a minority—in the main, council house tenants—a £15 deposit which may be returned on request after four quarterly bills have been settled satisfactorily". It may help the House if I quickly outline the circumstances which led to my discovery of this discriminatory practice which is so bitterly resented by many of my constituents in Feltham.

Some months ago, I was approached by a Mr. Burnett, who lives in a council house in Feltham and who is a skilled aircraft fitter at nearby London Airport and a person of complete integrity. Mr. Burnett had inquired about the installation of a new telephone in December of last year and was told that the installation charge would be £35. On the strength of that information, he asked for the application form to be sent to him. When it was received from the sales department of the West telephone area in London, he learned for the first time of the £15 extra deposit required from him.

Naturally, Mr. Burnett was irritated that the matter had not been mentioned up to that time. He rang the sales department and was told that the special deposit was required because—here I quote again— all council tenants are considered to be bad payers". As a person who values his good name and was annoyed, therefore, at being categorised as a bad payer, Mr. Burnett thereupon wrote a letter to Mr. S. H. P. Croft, the West telephone area manager, complaining about the extra deposit and alleging unfair discrimination against a whole class of people, namely, council house tenants.

Mr. G. G. Connell, the West area sales manager, replied to Mr. Burnett in due course, and began to sing a rather different tune in the sense that he claimed that it was not only council tenants who met this request for the extra deposit. People in privately-owned accommodation, he said, were also liable to be similarly treated, as, indeed, were business subscribers in certain circumstances.

Mr. Connell's letter went on: Whether or not we ask for a deposit depends entirely on the circumstances, and is determined by our previous experience concerning the locality, the type of property or the type of business concerned. In the past we have encountered considerable difficulty in parts of the Feltham exchange area and, in order as far as possible to safeguard our revenue, we find it prudent in these localities to ask all our customers for a deposit before the telephone is installed. A similar reply was received by me when I wrote to the area telephone manager on Mr. Burnett's behalf a short time later. Still feeling that a principle was involved here, I therefore asked Lord Peddie, the Chairman of the Post Office Users' National Council, to take up the cudgels on behalf of Mr. Burnett and myself.

Lord Peddie wrote promptly to the Post Office—presumably, to Sir William Rylands—and subsequently received a reply from its London Telecommunications Region supporting the West area manager. I quote now from that letter to Lord Peddie: In Feltham there is quite a number of council estates and a very high proportion of our total debts arise in these areas. There is no question of West Area applying discrimination against council tenants as such. It is quite coincidental that in Feltham the areas of difficulty are council-owned. In the light of those extracts, and having regard to what Mr. Burnett was told when he originally asked about the extra £15 deposit, one is entitled to say that there is probably a widespread practice, at least in West London, of fairly automatic discrimination against council tenants in the matter of the £15 deposit demanded by the Post Office.

There is a much more serious aspect to this matter which should be mentioned, namely, the question of natural justice. Whatever the headaches of the Post Office in regard to bad payers or even bad debts, these are problems which it shares with virtually every other large organisation in the country.

In the normal way, the relatively tiny minority of bad debts is part of the overheads of the enterprise and forms part of the cost of the service. It is treated in the accounts of the enterprise just like any other overhead.

Whatever means the Post Office employs to reduce these small but irritating debts, clearly the one action which cannot be tolerated is the lumping together, for the purposes of discriminatory treatment, of people who, in the view of some petty bureaucrat in the Post Office, constitute a group or a geographical area of so-called "bad payers". It may of course represent a kind of bureaucratic tidiness to treat people in this way, but, in my view and that of many of my constituents, it is deeply and outrageously offensive to our national sense of fair play.

Not only are the problems of collecting moneys due no greater for the Post Office than for many thousands of other organisations; in certain respects, the situation of the Post Office is very much easier. It can and does disconnect the telephone service, often to the great embarrassment and inconvenience of the slow or non-payer.

If, despite everything, the Post Office still feels that life is intolerable for it without this extra £15 deposit to guard it against an occasional slow payer, let it not practise this class-biased and unfair system which it is attempting to impose upon the council tenants of Feltham. Let it come forward with a deposit scheme which will be demanded of every prospective telephone customer and not just of those, like my constituent Mr. Burnett, who have the misfortune to live in an area labelled as "bad payers" by tin-pot local Napoleons without the wit to see that there is nothing very special about the Post Office's payment situation—certainly nothing which can justify such a marked swerving away from the integrity and high standards which, at least until recently, characterised the British Post Office.

I beg the Minister to use his considerable influence to stop this new-type rot before it begins to corrupt others of our national institutions.

1.48 a.m.

Mr. Gregor Mackenzie (Rutherglen)

It is not my normal practice to intervene in Adjournment debates, but I feel that the matter raised by my hon. Friend the Member for Feltham (Mr. Russell Kerr) is worthy of a few sentences from the Opposition Front Bench. I thank my hon. Friend for drawing the matter to our attention because, although he raised it on a constituency basis, it is a practice which I should not like to see widely followed throughout the rest of the country.

The Minister will know from exchanges which we have had at Question Time that this is a practice which in one form or another is being followed by the Post Office in many parts of the United Kingdom. Although, like my hon. Friend, I feel that the Post Office has every right—indeed, the duty—to make every effort to collect any form of arrears, this manner of sorting out financial problems is not one that we commend to the Minister and to the Department which he sponsors, the Post Office.

I have two concerns, and I mention them briefly. The first is that, although my hon. Friend has referred to the situation in Feltham, it is one which occurs in other parts of the country where whole exchange areas are regarded as places of bad payers. This is mainly because in those areas there are large numbers of people living in council houses. I understand that the Post Office is anxious to improve the call rate, the number of people using telephones and the number having telephones in their homes. If there is to be an explosion in communications this is a situation which we want to see the Post Office encouraging rather than deterring.

I take exception to this practice, because this kind of discrimination is exceedingly offensive. I can tell the Minister from personal experience that the majority of working-class people living in council houses are good payers and are always very conscious of their obligations to meet their commitments. Very often they are better able to face them than other people. In my view, selectivity of this kind is exceedingly bad. It ill becomes a national enterprise, which should be a model, to behave in this way.

I know that the Minister has no direct responsibility here, but I hope that the right hon. Gentleman will convey the words that we have uttered tonight to the Post Office and encourage it to do as my hon. Friend suggested and either adopt a national scheme or scrap this selective, discriminating and offensive practice.

1.50 a.m.

The Minister of Posts and Telecommunications (Sir John Eden)

This debate initiated by the hon. Member for Feltham (Mr. Russell Kerr), provides me with the opportunity, which I welcome, to explain why the Post Office finds it necessary to ask for deposits as security against the payment of telephone bills.

The legal basis for these deposits is paragraph 46 of the Post Office Telephone Scheme T3/1972 made under Section 28 of the Post Office Act 1969. There are two types of deposits in use. The first is a short-term deposit which is offset against the first bill. This is used where there is any reason to doubt that the initial bill, which includes a connection charge and is therefore often much higher than subsequent bills, will be settled promptly.

The second type is the ordinary deposit which is held for as long as there is judged to be a continuing risk of default. The Post Office normally requires this type of deposit from those who have been habitual bad payers. The deposit is related to the customer's average quarterly bill and is usually refunded when four consecutive quarterly bills have been paid promptly.

Mr. Russell Kerr

Our argument is not that the Post Office occasionally does something but that it groups together a whole area of people—bad payers, good payers, marvellous payers and shockers—and they all get caught in this way. That is what my hon. Friend and I are complaining about, not that the Post Office occasionally takes a prudent decision to protect its interests in the way the right hon. Gentleman said.

Sir J. Eden

I took the point made by the hon. Gentleman and by his hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) and understood it, and I shall refer to that in a moment. I thought that I should first set out the normal procedure and the legal basis for the carrying out of this practice by the Post Office.

A deposit is always required from customers whose service has been ter- minated because of non-payment and who wish a service again.

The provision of telephone service entails the granting of considerable credit. Deposits enable the Post Office to provide a service even in cases where there is reason to doubt the credit-worthiness of applicants, while at the same time safeguarding the business, and therefore the majority of customers, from the consequences of default by the few. Creditworthiness is not an easy matter to establish, and inevitably, just as there are cases where the Post Office is not secured against bad debts, there will be cases where it can be shown that the taking of a deposit was unnecessary. There must always be a certain amount of subjective judgment involved in the decision to request a deposit, but I know that the Post Office is constantly seeking better methods of dealing with this difficult problem.

At present, the authority to request deposits is vested in local management with broad guidelines from telecommunications headquarters. Local managers make periodic analyses of bad debt cases and use the information from these—and here I come to the point raised by the hon. Gentleman—to indicate the localities, occupations or types of business from which requests for service must be given careful consideration.

Hon. Members can gain some idea of the problem facing the Post Office from the following figures: in the financial year ending March 1973, bad debts amounted to £4.8 million, equivalent to a levy of 44p on each and every exchange line. The amounts written off by the Post Office as a result of bad debts is increasing at a rate greater than that proportionate to the increase in the growth of the system and the inflationary trend. It is a problem of substantial dimensions. The total amount held in deposits at 31st March 1973 was just over £F3 million.

The hon. Member for Feltham referred to instances of alleged discrimination against people in his constituency. I am sure that as a result of this debate the Post Office will wish to look further into these cases and, I expect, will certainly follow this up in due course with a letter to him. There is, of course, no question of the Post Office discriminating against Feltham or any particular locality in the hon. Member's constituency.

The Post Office, has, however, had some difficulties in the area over unpaid accounts, and the local manager decided to request deposits from residential applicants in their exchange area wherever credit-worthiness could not readily be established. The existing guidelines used in the area are that such customers should pay £35 short-term deposits and £15 ordinary deposits.

The overall position in the Feltham exchange areas is somewhat disturbing. Apparently, three years ago, it became possible to give a large number of people on the waiting list a telephone service. Subsequently there were a large number of unpaid first accounts. In 1971, 67 outstanding accounts on the Feltham exchange were written off, representing approximately £2,000. In 1972 the number of accounts written off rose to 90, with a written-off amount of approximately £5,000. In March this year, the sum of £140 was lost in respect of one customer alone.

The hon. Member suggested that the apparent discrimination against some individuals or localities could be avoided, and the financial position of the Post Office could be improved, if all subscribers were required to pay connection charges in advance. This would, however, be very unpopular with customers and would be bound to cause disruption and delay to installation programmes, especially since the precise connection charge due to be charged in each case cannot be fixed until the engineer has completed the work of installation.

Local experience may indicate that special care must be taken in particular localities where there is a high incidence of bad debts. These are not necessarily or automatically by any manner of means council house areas or any other particular housing type of area. They can be areas of considerable affluence. This, however, is not the main criterion for requesting a deposit. Each case is looked at individually and all known circumstances are considered.

Mr. Russell Kerr

I am sorry to be so discourteous as to interrupt the Minister again, but I quoted from official Post Office correspondence which completely rebuts what he has just said. The Post Office area sales manager says "Yes, we do cover whole areas." It is not a question of most people or a section or a minority of the subscribers being asked for the deposit. It is whole areas, in the case of Feltham whole council house areas. I repeat that it goes up the nose of my hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) and myself that there should be this blanket discrimination against a section and not the selectivity that the Minister suggests to the House.

Sir J. Eden

I think that the hon. Member misunderstood me a little. I indicated that, where clear evidence is accumulated in a certain locality of a lack of credit-worthiness, in certain cases the local manager deems it wise to require deposits from that locality as a whole. But these are carefully considered and it is not something that the Post Office wishes to happen. It certainly does not wish to alienate its customers. It does not wish bad debts to arise in any locality.

As I said, I know that the Post Office will wish to look further into the matter in the light of the cases to which the hon. Gentleman referred, but I hope that he will understand that, where an accumulation of individuals have shown themselves to be bad debts in a particular locality, and there is a general experience of lack of credit-worthiness, it may be the right course to pursue as the Post Office has done.

I am sorry if this action has upset people who I am sure would not dream of defaulting on payments. Hon. Members will agree, however, I am sure, that particularly in the light of the figures I gave, that the Post Office has a difficult job in maintaining a balance between keeping its customers happy and protecting its revenue. Similar precautions to those that I have described are of course taken by local gas and electricity boards as well as by many private firms. Although such action may be necessary, it has to be recognised that this is a very sensitive mater. I am sure that it should always be handled with a great deal of care, understanding and tact. I emphasise that it is a matter of great reluctance to the Post Office that it has to go through a procedure like this at all.

Question put and agreed to.

Adjourned accordingly at two minutes past Two o'clock.