HC Deb 07 August 1975 vol 897 cc727-31
Mr. Tom King

(by Private Notice) asked the Secretary of State for Industry if he will make a statement of the Government's policy following the rejection of the Post Office's proposed tariff increases by the Post Office Users' National Council.

The Minister of State, Department of Industry (Mr. Gregor Mackenzie)

I am grateful to the Post Office Users' National Council for the thoroughness of its report, and the speed with which it has produced it. My right hon. Friend is considering the report. The tariff proposals of the Post Office were of course also referred by the corporation to the Price Commission, and my right hon. Friend will wish to have the commission's findings before reaching a view. I would, however, remind the hon. Member that it is Government policy to phase out subsidies to nationalised industries as quickly as possible; and that, as my right hon. Friend the Chief Secretary to the Treasury said in the debate on the Statutory Corporations (Financial Provisions) Bill, the Government's intention is that the Post Office's deficit for 1975–76 should be contained at £70 million.

Mr. King

We are grateful to the Minister of State for making the statement. We are aware that he has only just received the report, but does he appreciate that the urgency of the question is that the increases are otherwise due to come into effect on 29th September, before the House reassembles? Will he confirm that the rejection of the Post Office price increases by POUNC, which represents consumers, is quite unprecedented? Will he give an undertaking that this matter will be seriously reconsidered and that the views of this statutory body, which was set up under the Act to represent the interests of all consumers, will be given serious consideration by the Government and not brushed aside as one or two other independent reports have been? Does he accept that the POUNC has the same concern as all parties in the House in aiming to eliminate the deficit, but that just increasing prices with the risk of further rapid increases and of rapidly falling traffic may not achieve that objective? Will he give an undertaking that an independent inquiry into the whole operation of the Post Office—something we called for in the debate and which the council has also called for—will be set up with due dispatch by the Government?

Mr. Mackenzie

We have had a critical report from the POUNC before, as the hon. Member will recall. I can assure him that my right hon. Friend the Secretary of State, will give this matter most serious consideration. We have never brushed aside any recommendations which have been made by Lord Peddie and his colleagues on the council. We shall give their views the most serious consideration. We discussed the whole question of an inquiry not many days ago here in the House. Of course, my right hon. Friend will consider this recommendation, as he will consider all the other recommendations made by the council. The hon. Member will have noted what Lord Peddie said in his report that the one thing he does not want in the Post Office at this time is a witch-hunt, and that is the one thing we are determined not to have.

Mr. Mike Thomas

Does my right hon. Friend accept that this is another indication that the rapid phasing out of nationalised industry subsidies will affect the poorest most severely? A lot of old people will have great difficulty finding the money to heat their homes this winter, but now they will also be unable to afford to write letters and they certainly will not be able to afford a telephone. Will my right hon. Friend see whether there might be the possibility of not insisting on the level of private pension fund contributions and the other factors which make up the need for this £300 million? Can he not take some dramatic action, if only because the increased charges will affect most severely the poorest and those least able to pay?

Mr. Mackenzie

I cannot accept that the recommendations affect the poorest in the community. On telephones, the Post Office has deliberately contained the increase to the call rate and has not extended it to rentals or installation charges. There are possibilities for local authorities and others to make contributions to the poorer-off sections of the community. The Post Office has the obligation to break even. There are other organisations to take care of the poorer sections of the community.

Mr. Kenneth Lewis

The public are quite convinced that the Post Office needs to become more efficient and to save money through efficiency. Will the Minister give an assurance that there will be no announcement of these increases until the House reassembles so that we can at least debate the action which has been taken by the Post Office to secure this efficiency in order to achieve at least reasonable prices?

Mr. Mackenzie

We debated this topic not many days ago, and if my memory serves me right, the hon. Member was not present. The Post Office's financial difficulties are with us now and they have to be settled now. I am sure that the Opposition would not want us to put off increases for any length of time, because they appreciate that if we did so those difficulties would become even greater than they are already.

Mr. Pardoe

I accept the need to phase out the Post Office subsidy at the earliest opportunity, but is the Minister of State aware that this cannot be done simply by raising charges in order to meet the costs of the present standards of service and the present style of management, much of which are more appropriate to the nineteenth century than to the twentieth? Before this House will accept the need for these new charges, there will have to be a radical reappraisal of the standards of the service and of the whole question of the management of the Post Office. Will the hon. Gentleman say something about the chairmanship of the Post Office? Is he aware that the chairman, Sir William Ryland, is a reluctant chairman? What steps are the Government taking to find a replacement?

Mr. Mackenzie

As this Private Notice Question relates to the Post Office Users' National Council, it is worth pointing out to the hon. Gentleman that the council pays the greatest tribute to the chairman and members of the Post Office Board for the work that they are doing and for the loyalty and service of the staff of the Post Office.

Mr. Gwilym Roberts

Will my hon. Friend pay particular attention to what my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Thomas) said earlier? There are real dangers in cutting out these subsidies in terms of unemployment and inflation. Will he not accept that many of the public sector industries, for example, energy, transport and even the Post Office, operate in a social context and that as a party our first and main priority should be to maintain those social services?

Mr. Mackenzie

Together with the Post Office, we recognise that under the Act we have pledged to support our social obligations. The Post Office takes those obligations seriously. During the last debate on the Post Office we discussed whether we should ask the general run of taxpayers, many of whom are often poor people, whether they want to subsidise the users of the service. In the main, the users of the service are those in the business world and not the poorer people, about whom my hon. Friends are genuinely concerned.

Mr. Dudley Smith

Is the hon. Gentleman aware that apart from the fact that these proposed increases are quite unacceptable to members of the public, they will have a devastating effect on industry and commerce, which he has just mentioned, at a time when they need all the help and support they can get?

Mr. Mackenzie

My right hon. Friend the Secretary of State for Industry and I appreciate that. We shall be considering all of these recommendations. The Post Office is conscious of the need for efficiency. It is constantly looking at means of reducing its costs and the services that it provides. As the hon. Member for Bridgwater (Mr. King) well knows, these discussions have been taking place and the Post Office has tried very hard to provide a good service at low costs. We have to bear in mind that the high labour-intensive nature of the Post Office means that there is no way of reducing costs in relation to the employment of postmen.