REDUCTION OF CAPITAL DEBT OF POST OFFICE (Hansard, 25 February 1976)

§ Mr. Nelson
I beg to move Amendment No. 8, in page 2, line 30, leave out Clause 4.
This last amendment brings us to the area of the Bill concerned with the debt-equity ratio that Giro will attract after the reconstruction set out in the Bill. This has already received some attention, both in Committee and during our discussion on the last amendment. The eloquence and detailed knowledge of my hon. Friend the Member for Mid-Sussex (Mr. Renton) are an elightenment and assistance to us in passing judgment and discussing this matter.
There are, however, some important points worth raising here, because it is quite clear that the Government's reconstruction has largely been determined by that of two other State industries. I feel that the guiding line for capital reconstruction of Giro should be that existing or prevalent in the joint stock banking sector and not that which the British Steel Corporation or the British Airways Board has at this moment.
The White Paper says that about £16.7 million—which is half the past losses of Giro—should be written off, together with public dividend capital amounting to £13 million, or half the Giro's indebtedness remaining after the write-off. These two figures total £29.7 million—the figure mentioned in Clause 4, which the Government are seeking to write off. It is not Conservative policy to write off public debt, because it is not Conservative policy to incur it in the first place, and we deprecate the writing off of public debt, as we do the incurring of it. One cannot make public debt disappear. The taxpayer is still on the hook for this sum.
The accumulated losses of Giro over past years have had to be financed in various ways, either by the taxpayer paying his taxes or by the Government borrowing money on his behalf. These moneys have been borrowed and paid by the taxpayer in order to subsidise the losses incurred by Giro. Whether one continues to have those losses—the £29.7 million—in Giro's balance sheet, in the Post Office or in the Consolidated Fund, they are still debts for which the tax- 478 payer is on the hook. Therefore it is worth emphasising that we are not making debt disappear.
The taxpayer has had to suffer the losses of Giro in recent years and will continue to suffer and have to pay the cost of the accumulated deficit. But the basis on which the overall figure for write-off has been struck appears to mean that the loss to the Post Office from the National Loan Fund and the resulting ratio of National Loan Fund indebtedness to public dividend capital is broadly in line with that for the British Steel Corporation and the British Airways Board, two of the bodies mentioned in the White Paper. This is the premise we question.
The Minister in reply, in Committee, said that while banks usually operated a debt-equity ratio of 20 per cent. to 80 per cent., the debt-equity ratio of the two industries I have mentioned was roughly around 50:50, and that it was decided that this should be the basis of the capital reconstruction of Giro.
The Minister admitted that the debt-equity ratio of the banks is very different from that of the Giro". He added that the best course is not to depart too far from the existing public sector precedents, these being the British Airways Board and the British Steel Corporation."—[Official Report, Standing Committee B, 10th February 1976; c. 223.] The Minister obviously believes that public dividend capital must form a substantial element in Giro capital. We said that 50 per cent. seemed to be about right.
There seemed to be two basic possibilities open to the Minister and the Government in deciding to undertake a capital reconstruction for Giro and therefore to write off an amount of debt as set out in Clause 4. They can accept that any capital reconstruction, any writing-off of debt, any paying-off of public dividend capital, is purely cosmetic—as, indeed, to a certain extent it is, if we look at the whole of the public sector account, with the taxpayer and the Government being on the hook for the liabilities of Giro and the Post Office.
One can say it does not matter, and that therefore it can be left as it is, allowing the accumulated deficits to remain. Accepting that Giro may not in the future 479 be able to make sufficient earnings to recoup past losses, nevertheless the taxpayer will have to continue to subsidise Giro's operations. But instead of that, as if by a magic wand, it is suggested that £29.7 million be written off and £13 million be converted into public dividend capital, thereby making Giro, as a separate entity or separate banking arm, viable. It is suggested that in some way one is improving the situation for the taxpayer and that this is better overall financial management.
The fact is that unless it affects the amount of business Giro is able to obtain, or unless it puts Giro in the position where the achievements and aims of its management will be enhanced, there will not be any great difference from such a capital reconstruction.
The alternative to leaving the capital structure as it is, with its accumulated deficits, is to recognise that Giro is a separate banking arm of the Post Office and should be a large extent be regarded as a separate entity. If that is the case—and to some extent this is recognised, by the publishing of separate accounts for the Giro—it seems to us that one is recognising that it is a separate entity, and that it should therefore be subject to the same rules, requirements and scrutiny as those operating in the private sector, and subject to the commercial constraints and requirements that the Bank of England places on those banks in terms of the capital structure which they have to sustain.
The Minister of State said in Committee: We question the view that the principles to be applied by the Bank of England in assessing the adequacy of banks' capital are directly applicable to Giro as if it were an independent bank."—[Official Report, Standing Committee B; 10th February 1976, c. 162.] Under the proposed capital reconstruction Giro will continue to have negative free capital resources—that is to say, the public dividend capital of Giro will be £3.7 million less than the accumulated deficit. No bank in the private sector would be allowed to trade with a capital structure such as that proposed in the Bill, let alone that which has existed up to this stage. Indeed, Giro is seeking to take on major new banking services to make it, as it were, a general bank.
480 It is proper, having recognised that to some extent it is a separate legal entity, that it should have a capital requirement to conform with the strictures of the Bank of England.
8.30 p.m.
We are told that the Post Office will stand behind Giro. On 31st March last year the Post Office had a general reserve of £1,161 million—10 times the Giro's customers' balances. Excluding Giro, the net current assets of the Post Office were £31 million. Is it desirable that Post Office customers—or, in the last resort, the taxpayer—should support Giro when it should be encouraged to stand on its own feet? What is important is that Giro should discharge, and be seen to discharge, its part of the implicit bargain by which its depositors are, in the last resort, to enjoy protection. This must involve behaving prudently in general and maintaining accepted standards of capital adequacy. This is necessary to ensure that relations between the Government and nationalised industry are on a proper footing, and—perhaps more important—to ensure fair competition between Giro and the banks.
The fact that banks outside the public sector are required, by their own convention and the wishes of the Bank of England, to finance a certain proportion of their banking assets with capital and reserves, rather than deposits or loans, operates as an important commercial constraint. It affects the types and amounts of business that they are able to undertake, and the rates of return which they must seek. These are most important factors to be taken into account when working out the amount of loan to be written off and the capital structure required by Giro for its operation in future.
The Conservative view—it is certainly my own view—is that the capital write off of the debts of Giro should be the minimum possible. We should seek to put Giro in a position in which it can earn a rate of return to produce net earnings sufficient to accumulate net earnings without paying dividend to the Consolidated Fund. Over a short period of time—no fewer than five years and no more than 10 years—Giro should accumulate sufficient reserves to enable it to comply with the requirements laid down by the Bank of England.
481 At a time of spiralling expenditure and heavy public sector deficit, we should scrutinise further the losses to be written off by the Government. It is worth noting that the present Government have successively reduced the heritage to be enjoyed by future generations. Although it is said that only £27½ million is to be written off, this is yet another example of the way in which massive debts are being incurred by the public sector. It should hasten the day when the operations of public sector industry are put on a more viable footing and when the good intentions of the Government's industrial policy are translated into facts. The Government's deeds are often different from their good intentions. They could make a good start by explaining in full the basis on which they have decided to write off this amount. They should put Giro on a proper footing, so that it can accumulate sufficient reserves to comply with the requirements of the Bank of England.
We hope that it will not be necessary to take the matter to a Division. However, we shall seek detailed assurances on some of these points.

§ Mr. Parkinson
I should like to underline the excellent points made by my hon. Friend the Member for Chichester (Mr. Nelson). The truth of the matter is that under cover of being brisk and businesslike, and in an effort ostensibly to give the public a chance to become owners of a viable commercial bank, the Government are asking us tonight—once again in an empty House of Commons—to write off £17 million of taxpayers' money. At a stroke, we are getting rid of that large sum of money. We are being told to take the view that it is a matter of bad luck that Giro has lost all this money, and that we must straight away write off the whole sum of £17 million.
Although it has lost another £16.7 million, it will make all sorts of noises about being businesslike and setting objectives, and it will assure us that from now on it will all be different. We are very sceptical about this. The facts speak for themselves. The poor British taxpayer has had written off £7,000 million in deficits on the nationalised industries since nationalisation began, so we might be congratulating ourselves that tonight we 482 are doing the taxpayer a favour and writing off only £17 million of his money.

§ Mr. Gregor Mackenzie
I know that the hon. Member always wants to be fair. No doubt he will want to divide that figure and tell us how much was written off by Labour Governments and how much by Conservative Governments. I am sure that we would all find that very interesting.

§ Mr. Parkinson
I know that you, Mr. Deputy Speaker, would not like me to stray into a discussion of the range of nationalised industries.

§ Mr. Tim Renton
Yes, go on.

Mr. Deputy Speaker (Sir Myer Gal-pem)
Order. I hope that we shall not have a violent row. The debate has been very peaceful so far.

§ Mr. Parkinson
I think that with the numbers present tonight, we should find it difficult to have a violent row.
I accept that the Conservative Party is hardly any better at running nationalised industries than the Labour Party but at least we have learned that Governments do not know how to handle them. We have learned not to create any more until we have worked out how to organise, control and manage them.
That is a lesson that Labour Members have not learned. They have spent a great deal of time doing exactly the opposite—creating yet more national burdens. In two or three years, perhaps when we are writing off another £20 million of the money in the Post Office because Giro has gone wrong, that figure of £7,000 million will be considerably greater.
Once again, with a stroke of our legislative pen, we are writing off £17 million of the taxpayer's hard-earned money. What is worse, the clause creates a capital structure that is commercial nonsense. My hon. Friend presented us with this picture of Giro going to the Department of Industry, the Treasury or the Bank of England and saying "We are thinking of setting up a marvellous bank with £13 million of capital. However, we have already lost £17 million, so we will have a minus quantity where the shareholders' funds should be. But I am sure that that will not worry you. You will let us carry on because we have an ideal structure: we are not a genuine commercial bank at all, 483 but yet another loss-making national liability".
Clause 4 is a further indictment of nationalised industries and a further squandering of the taxpayers' money. In the guise of a businesslike approach, it will create commercial nonsense. I agree that we should not even dignify the clause by voting to remove it. We should just mark it sadly as further evidence that we are right to resist the spread of nationalisation and move on quickly to something more important.

§ Mr. Gregor Mackenzie
The amendment would prevent the writing off of half of Giro's accumulated losses. I referred on Second Reading to Giro being allowed modestly and prudently to expand. I want to emphasise that again for the benefit of all those concerned. The present services provided will be modestly expanded. Therefore, we thought it right to let it have a fresh start. There is no point in leaving it to carry on with its present burden of interest debt. I do not relish asking the House for the write-off of losses any more than I am sure Conservative Members did when they were in power.
The hon. Member for Hertfordshire, South (Mr. Parkinson) did not respond to my invitation, which I thought was fair, to say how much had been written off by previous Conservative Administrations. However, he will recall that it was a great deal of money. If my memory serves me right—indeed it must do so because I have a piece of paper in front of me which tells me the exact figures—it was £1,400 million. That is a great deal of money, by anyone's standards.

§ Mr. Michael Marshall
If the Minister is to continue playing this argument would he be willing to apportion blame at the ratio of 80 per cent. to Labour Governments and 20 per cent. to Conservative Governments?

§ Mr. Mackenzie
I did not start the argument. I was simply saying that there seemed to be something very wicked, according to Opposition Members, about writing off losses of this kind in the nationalised sector. However, this has been done time and time again.

§ Mr. Viggers
Will the Minister tell us who nationalised the industries from which the amounts had to be written off?

§ Mr. Mackenzie
We nationalised a great many industries. The hon. Gentleman will recall that the Conservatives nationalised Rolls-Royce. Hon. Gentlemen must remember that they had 13 years in which, if they did not like the way the nationalised industries were running, and did not like the National Coal Board or British Railways, they could have denationalised them. However, at that time they did not think it right to do so.

§ Mr. John Golding (Newcastle-under-Lyme)
Will my hon. Friend remind Opposition Members that the last time they debated the Post Office they could not decide whether Charles II or Oliver Cromwell nationalised it.

§ Mr. Mackenzie
The Conservatives were in power for a long time. They had the chance to denationalise the Post Office, but although there were a number of them who at that time were anxious to hive off the telecommunications sector I do not think any of them suggested that the vast postal service should be taken out of public ownership. Perhaps we are taking this matter further than you, Mr. Deputy Speaker, are prepared to permit. All I am saying is that no one likes asking the House for a write-off of this kind.

§ Mr. Tim Renton
The Minister has made a point on which I should like to comment. In passing I point out that we are delighted to see the hon. Member for Newcastle-under-Lyme (Mr. Golding) present. We wondered where he had been all afternoon in view of his interest in Post Office affairs.
Although it is true that my hon. Friends have not suggested that the Post Office letter service should be denationalised, some of us have thought and recently expressed the view that the Post Office monopoly of the letter service should no longer be protected. The Minister must be aware of that matter.

§ Mr. Mackenzie
I am conscious that it is the minority view of the House of Commons that the Post Office postal service monopoly should be broken. This is something quite new. It is new to the Conservatives now that they have become the Opposition, but it was never the stand 485 they took when they were in control of our affairs. It is all very well people getting up and making points when they are in Opposition, but it must be remembered that the Conservatives were in power for a long time. Had they wanted to do something about it, they had adequate opportunity.
8.45 p.m.
I do not like having to come to the House to ask for write-offs of this kind, but it is the realistic thing to do here. Coupled with the provision of a modest extension of banking services the capital reconstruction gives Giro a capital-backed service and a reasonably secure future. We have set the level of write-off at a responsible level within reasonable margins of error—and by that I mean a level at which Giro will be faced with the challenge of wiping out its past debts.
The Conservatives are entitled to criticise our measure, but if they believe, as I do, that Giro should remain in being it is unlikely that they would want it to be left with a growing debt of interest which it cannot hope to repay. If they do not, by how much would they seek to reduce Giro's liabilities?
The hon. Members for Chichester (Mr. Nelson) and Hertfordshire, South have criticised the whole question of public dividend capital as a means of assisting in this respect. PDC was first issued to BO AC in 1966 under the Air Corporations Act. It was transferred to the British Airways Board on 1st April 1972. In addition, £700 million of the British Steel Corporation's capital was converted to PDC by the Iron and Steel Act 1969. The National Enterprise Board and the new shipbuilding and aerospace corporations, should they be set up, will likewise have PDC.
It was introduced originally to deal with the problems which confronted those nationalised industries which, although basically profitable, nevertheless had to endure fluctuating results because of the cyclical nature of their business or for other similar reasons. If one were to finance those industries solely by the provision of loan capital, that would be a heavy burden on the industries which would have to pay fixed interest charges, and in a downswing period they would land themselves with deficits.—[Official Report, 9th August 1972; Vol. 842, c. 1781.] I have used those words because they are not mine. They were the words of the right hon. Member for Wanstead and Woodford (Mr. Jenkin) when he was 486 Chief Secretary to the Treasury. In the same speech the right hon. Gentleman reminded the House that it was the hon. Member for Henley (Mr. Heseltine) who, as Minister for Aerospace, told the House a few months previously that up to £200 million of PDC was to be issued to BOAC over the next few years for the purchase of five Concordes.

§ Mr. Parkinson
The Minister is making a very good speech, but he is making it in the wrong debate. The Opposition are not arguing against the concept of PDC. We never have done so. Nobody in this debate has argued against it. We have said that a loss is not turned into something else just by transferring it out of the part of the books which says "Deficit" and into the part which says "Dividend capital". The truth is that the loss exceeds the capital. Therefore, there is no public dividend capital because it has disappeared, it has been lost. It is not until the losses have been recouped that the dividend capital comes into existence again. The Minister is making a grand speech, but he should save it for another occasion because it has nothing to do with this debate.

§ Mr. Mackenzie
The hon. Gentleman's comments always puzzled me slightly. He says that PDC is all right but it is not all right in the context of this Bill. If I have paraphrased the hon. Gentleman wrongly, I apologise to him.

§ Mr. Parkinson
I am sorry to interrupt again—

Mr. Deputy Speaker
Order. The hon. Member is entitled to intervene if the Minister gives way, but only to make an intervention, not another speech.

§ Mr. Parkinson
I willingly accept your advice, Mr. Deputy Speaker. If I am in business with £100 worth of capital and I make a loss of £105, my capital has disappeared and I have a deficit of £5. I can call what is there whatever I like, but it does not exist any more. I am not saying that we are not in favour of public dividend capital. I am saying that in this case the Minister is describing a deficit as public dividend capital, and that makes a nonsense of the whole concept of PDC.

§ Mr. Mackenzie
We tried during the course of the preparation of our White 487 Paper, during the Second Reading debate and in Committee upstairs, to explain the position. We acknowledged the deficit that had been built up. We acknowledged that we were writing off half of it because we did not want there to be any soft options for Giro. We took over half in PDC according to precedents set by the previous Administration. We regarded that as a useful way of tackling the problem with which we were faced. There was a deficit which would have been a tremendous burden to any organisation. Previous Governments have from time to time taken steps similar to those that we are taking now. I listened to the arguments advanced by the hon. Member for Chichester and his hon. Friend the Member for Hertfordshire, South about this write-off, but I do not feel that I can accept the amendment, and I invite my hon. Friends to reject it.

§ Mr. Nelson
I fear that yet again a number of balls have whistled past the Minister's ears without his seeing them, and I regard his replies as unsatisfactory.
Earlier in the debate my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) and I were talking about the proportion of the PDC to loan stock, the debt-equity ratio. I do not feel that we have received satisfactory assurances about the way in which the figures have been struck. You, Mr. Deputy Speaker, will be the first to recognise that if this clause remains in the Bill, under Clause 3, which is consequential, the Minister will be able to come back and introduce a further element of PDC. He could under Clause 3 from time to time pay up more dividend capital, and therefore write off more public debt.
We say that it is undesirable to incur this debt, just as it is to have to write it off. We are disappointed that over the years of increasing State intervention and nationalisation we have incurred losses of £1,000 million—£600 million of them under successive Labour Governments. What hypocrisy and profligacy we get from Labour Members. It is with a sense of regret that we have heard the Minister's reply. Nevertheless, we do not intend to take the matter to a Division. I beg to ask leave to withdraw the amendment.

§ Mr. Michael Marshall
The Minister of State's formal moving of the Third Reading typifies the disappointment which we have experienced. He has not taken the opportunity, even at this late stage, of setting our minds at rest on many of our worries.
The debate has been valuable because it has helped clarify, if clarification were needed, many of the fears which hon. Members on all sides expressed in Committee and which have not been answered from the Government Front Bench. The Minister's speech, and those of his colleagues, further underlines the difficulty we have in reaching a proper judgment on the Post Office Giro banking activities.
There is inadequate, indeed, unacceptable, parliamentary scrutiny envisaged in the Bill. The three officials in the Department of Industry who are directly involved have faced a massive task, and we have paid tribute to them. It is not good enough for the country to see the effective write-off of £29 million of taxpayers' money, whichever way it is sliced, without some assurances. The lessons should have been learned and some kind of system to vet the future activities of Giro should be introduced. That is the judgment which will be made by anyone who has listened to the debate or who will read the report of it.
We have had no real answers on many aspects of Giro banking. We have had no comment on the question of market research and no answers on the liability of Giro in terms of consumer credit. The questions which we posed on Second Reading and in Committee still remain unanswered. We have had nothing to suggest that any thought has been given to the practical realities of the work which Giro seeks to extend in the area of personal loans. We are told that the range of £150 to £1,000 is a guideline which is to be applied informally but that is not in the Bill.
Even if those figures are taken as gospel, we have not heard how Giro will find resources to deal with matters such as the failure to pay, bad debts and repossession of consumer goods. We have had examples. One was the notion of 489 television sets and cars blocking up our post offices and another suggested that Miss Marple will have to take her bicycle and attend to the problems. Such difficulties are bound to arise if the business is to expand. We have had no meaningful answers today.
We were heartened when we saw the Financial Secretary come into the Chamber today.

§ Mr. Tom Pendry (Stalybridge and Hyde)
Hear, hear.

§ Mr. Marshall
I am glad that the Government Whip thinks that that deserves a cheer. One cheer was all we had time for before the Financial Secretary left us. It was not clear whether it was his blushes or his anxiety to get completely shot of the Bill that kept him out of the Chamber. I suspect it was a combination of both.
But, in fact, the rôle of the Treasury as revealed by the Financial Secretary has clearly been to do a whitewash job and to imply that this is a minor Bill, that it is only a matter of £30 million of the taxpayers' money, and that we are talking only about £150 million compared with the £7 billion involved in the kind of massive State bank to which I shall shortly refer. This is the sort of broad brush, splendidly "It is only a relatively small sum of money" kind of argument that we have had to put up with from the Treasury.
It would be wrong to let the Bill go without putting on record that the balance sheet for the traditional Giro activity, which is what the Financial Secretary talks about, has no relationship to the balance sheet for Giro's likely anticipated activities over the next few years. My hon. Friend the Member for Mid-Sussex (Mr. Renton) made this point, but it is important to understand that the kind of myth that the Financial Secretary tried to put—that in some way the stability of Giro as it is stands it in good stead for future banking—is totally to ignore the challenges of the future.
The Financial Secretary failed to stand by the principles he annunciated only last week on the Trustee Savings Bank Bill. We have had a good debate today in making comparisons between the two Bills, but there is no evidence that the 490 Government have taken on board the obvious need to have consistent principles, particularly if, as we are told, we are to have supervisory banking legislation covering both Giro and Trustee Savings Banks.
I turn now to the rôle of Giro itself. The Minister of State showed his traditional loyalty to those over whom he has overall responsibility in perhaps letting Mr. Singer down rather lightly on the general question brought out in the report in The Guardian last Friday. It is an important aspect of our thinking to find that, within days before the Bill is likely to receive its Third Reading, we have Press reports that Giro's chief has outlined the basis for a massive State bank. We have quoted the report in full and it has not been effectively challenged.
The Minister of State sought to play down provisions of the Bill, which, he said, did not amount to a charter for this type of development, but at no point was he able to refute the suggestion that the Bill in any way inhibits Mr. Singer and his colleagues from pursuing precisely the aims that Mr. Singer has set out if they wish. If the Minister now wishes to disown the fact that such an opportunity is open to Giro banking, I will gladly give way.

§ Mr. Gregor Mackenzie
The Government's intentions for Giro are clear, I have already said today that they are fully set out in the White Paper. I also made it clear on Second Reading. They are no more, no less, than that.

§ Mr. Marshall
I appreciate the hon. Gentleman making his own view clear. I suppose that there is now not much chance to debate the matter further, but it is clear that a divergence of view is emerging between the two parties to this matter. I shall have to leave the hon. Gentleman to continue this dialogue in the appropriate quarter within Giro. Nevertheless, it is important that the House should understand that nothing that the Minister has said tonight in any way refutes the suggestion that, if it is the will and the ambition of Giro to create or be part of a massive State bank, there is nothing in the Bill to inhibit such a development.
On this whole question we have to make the point that if Giro development into wider banking services is to be 491 regarded as part of the creation of a State bank, bringing national savings, the Paymaster-General's Office and so forth, together, it is the people's savings and Government revenue—the taxpayers' money—with which we are concerned. Those constitute the £7 billion so glibly talked about as making it possible for a massive State bank to compete or to be in the same league with Barclays. Let the word go forth that that is the scale of resources which may well be at risk if such development follows the passage of the Bill.
I do not want to end on a controversial note. It is customary on Third Reading to pay tribute to the Minister who has guided our proceedings through Committee and on the Floor of the House. The Minister would be the first to admit that he has not been short of tributes from our side of the House because we have had many discussions on these important matters.
It is only fair to pay particular tribute to the fact that the hon. Gentleman handled the Bill on his own without Treasury help, which we believe he should have had.

§ Mr. Tim Renton
Of course he should.

§ Mr. Marshall
It was painfully obvious that when Treasury help, if that is what it was, arrived to the beleaguered garrison today, it was the kind of help that it could well do without.

§ Mr. Tim Renton
The Minister kicked the ball into his own goal.

§ Mr. Marshall
Yes, indeed. The Minister of State has had to take a certain amount of assault by metaphor. He has been painted as a batsman who has not always seen the ball coming at him. My hon. Friend the Member for Mid-Sussex has referred to the football scene and I saw the Minister in a more agricultural setting. The hon. Gentleman must recognise that he does not know who his true friends are. Time and again it is Opposition Members who have tried to save him from himself or, at least, from the ravages of what could happen if Post Office Giro banking goes adrift. In doing that we are not entirely seeking to preserve the Minister's integrity. We are 492 much more concerned with the taxpayers' interests.

§ Mr. Dennis Canavan (West Stirlingshire)
With preserving bankers' interests.

§ Mr. Marshall
I am glad that the hon. Member for West Stirlingshire (Mr. Canavan) has chipped in. It is interesting that he should join us at this late hour. I have no banking interest whatever to declare.

§ Mr. Canavan
But the hon. Gentleman's Friends have.

§ Mr. Marshall
The hon. Member for Thornaby (Mr. Wrigglesworth), who is sitting behind the hon. Gentleman, can probably put him straight as to what banking interests really are.
I did not want this occasion to pass without paying tribute to the Minister of State. I am also willing to pay tribute to those Labour members of the Committee who assisted our proceedings. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) raised an important issue which the Minister tried to deal with tonight. The hon. Member for Thornaby made a number of contributions and demonstrated his experience in this area. We are delighted at the remarkable transformation and sea change that the hon. Gentleman underwent between the Committee stage of the Bill and accepting the argument that we have impressed upon him in relation to Trustee Savings Banks.
I even want to pay tribute to the hon. Member for Newcastle-under-Lyme (Mr. Golding) who from time to time has made a robust effort to protect the Chair. He will note that I am not unappreciative of that. It is fascinating to see him giving the splendid impression of the poacher turned gamekeeper. We welcome him here, even at this late stage of our debate.
Finally, I pay tribute to my hon. Friends. As I glance behind me I see that six out of the seven hon. Members who served on the Committee are present. Indeed, I might say that the Magnificent Seven, for those of us who follow these matters, are here in force. We have put up a hard fight.
There is no doubt—and I hope that the House takes this point on board—that the Committee proceedings would have been vastly improved had there been 493 a mechanism in the form of a combined Select and Standing Committee by which to examine the Bill. It would have enabled us to draw on experience from all sides because many hon. Members have substantial experience of banking and the Post Office. I want that on the record tonight.
We have made it plain that we do not seek at this stage to revive a major opposition to the Bill in its present form. The whole basis of our case was our vote on Clause 1. We took fundamental objection to the concept of Post Office Giro extending its banking services. We have put our objections on the basis of the inadequate capital structure, as we see it, on the insufficient evidence of future marketing prospects, and, indeed, on the whole failure of the Government to satisfy us on this development.
What we would now wish to do, in view of the lateness of the hour, is to take into account the needs of some hon. Members, from both sides of the House, who are waiting to move on to other important business. That is why, in suggesting to my hon. Friends that we should not seek a formal vote on the Third Reading, we are making this point simply: we want it to be understood that our basic objection was to the very notion of the extension of banking services by the Post Office Giro because of the evidence which was presented to us, which we felt was inadequate and insufficient and which has raised the fears which we have outlined today.
It is because of the folly and mistakes that we see in the Bill that we felt so passionately in voting against Clause 1. We are content to rest there. However, I warn the Minister of State and the Government that as these follies and mistakes, and the problems that we fear will arise, become more and more apparent over the months and years ahead, we hope that he will realise that it is probably he who is the Flying Dutchman of the uneasy Post Office Giro banking service vessel to whom we shall turn for recompense and retribution.

§ Mr. Wrigglesworth
I should like to make a few brief comments to wish the National Giro well when the Bill becomes an Act. I should also like to comment on the business that has transpired in 494 Standing Committee and on the Floor of the House.
As I have made clear, on Second Reading and at other times, I am disappointed in many ways by the fact that the Bill does not go further, in the way that has been described, and bring in the other public sector banking organisations, which are already in existence and could be brought together into one large corporate public sector bank. However, I accept that this may be premature at present. I think that it should be looked at again when the Carter Committee has finished its investigations. If the Carter Committee should suggest that the Post Office be split up, perhaps we should look again at the position of National Giro within that set-up, and consider whether it could be linked with other public sector banking organisations in the way that has been described.
For the purposes of this Bill, however, it was premature of the Opposition and others to suggest that the sort of conditions that they wish to attach to the Bill should apply, because the National Giro has developed very strongly as a part of the Post Office, using all the services that the central part of the Post Office can and does provide for it. With that backing, Giro has been able to develop in the way that it has, providing current account banking facilities for almost 500,000 customers, in a quite successful way, apparently, and latterly in a financially successful way.
I must not let this occasion pass without commenting briefly on the Opposition's attitude to the Bill and also commenting on the Trustee Savings Banks Bill. I have been accused of having undergone a remarkable conversion. I must say, particularly to the hon. Member for Hertfordshire, South (Mr. Parkinson), that the Opposition's childlike faith in the Trustee Savings Banks compared with their aggressive and, at times, hostile, nit-picking attitude towards Giro has provided a remarkable contrast.

§ Mr. Parkinson
I am sorry that the hon. Gentleman finds it difficult to understand my simple point. If Giro were to have 10 years in which to make the transformation from a cash remitting service into a commercial bank, and if it were to use those 10 years to acquire the necessary expertise, under Treasury and Bank of England supervision, none 495 of us would have been making the same argument. The point that I made was that on the day after this Bill is approved by the House of Lords and receives the Royal Assent, regardless of whether or not it has the expertise, Giro can do all the things that the Trustee Savings Banks will not be able to do for 10 years.

§ Mr. Wrigglesworth
That may well be the case. But Conservative Members have refused to acknowledge the assurance that is given quite clearly in the White Paper—namely, that the same sort of caution will be exercised with Giro as will be exercised with the Trustee Savings Banks.
The attitude of Conservative Members, and especially the hon. Member for Hertfordshire, South, is inconsistent. Not one amendment to the Trustee Savings Banks Bill was tabled by the Opposition, despite certain fears being expressed. Conservative Members with banking experience expressed considerable reserves about that Bill, but no amendments were tabled. There is considerable inconsistency on the part of the Opposition in their attitude to the two Bills. They have adopted a nit-picking and antagonistic approach towards Giro and the proposals for minor extensions that are contained in the Bill.
I welcome the Bill as a modest development of Giro facilities. It will be welcomed by Giro's customers. It will strengthen the services that it can provide and, therefore, its finances. It will provide a base for a much more rapid and successful expansion in future.
I pay tribute to the way in which my hon. Friend the Minister of State has handled the Bill through all its stages. His knowledge of the Post Office is almost second to none among my right hon. and hon. Friends. As our Opposition spokesman on Post Office matters he did a magnificent job. I pay tribute to him and thank him for the magnificent way in which he has handled the Bill.

§ Mr. Spencer Le Marchant (High Peak)
To speak following the hon. Member for Thornaby (Mr. Wrigglesworth) is a privilege, because I know that he has put a great deal of time into the consideration of the Bill. I realise that 496 many hon. Members on both sides of the Chamber have given the Bill a great deal of their time, care and consideration.
We must get down to the basics. Is the Post Office right? Has it got its sums right? Is the cost of this whole operation moderate for the taxpayer, or is it not? The Minister has told us that he has a most elaborate computer system—one of the largest and most involved systems in Europe. Is that necessarily right?
We know that in 1965 the Government of the day got all their sums wrong. We know that the White Paper forecast was absolutely, completely and utterly incorrect. It must not be thought that I am condemning Giro on that score. It would not be right to criticise Giro for what happened in 1965, any more than it has been right for the Minister to criticise Mr. Chataway, a distinguished ex-Member who has served his country well. Some Labour Members say that he is responsible for all that has gone before, but I say to you, Mr. Deputy Speaker—

Mr. Deputy Speaker
I must tell the hon. Member for High Peak (Mr. Le Marchant) that I have a pocket calculator.

§ Mr. Le Marchant
How much longer are we to accept the large losses that are being made by Giro? We know that on Second Reading the Minister said that the small profit of last year should not be taken as a sign that a profit can be maintained. That is important to remember. If we do not think that we can maintain the small profit that was made last year following the vast losses which this Socialist emporium has brought upon us, are we entitled to go on?
Are we entitled to go on supporting an organisation which has admitted that it cannot compete with private banks? We know that private banks have had their problems. Yet we see that Giro is not capable. Are the people in Giro equipped to do the job which it is being suggested by the Minister they should do? Are we certain that it is right to go on supporting this admitted loss-maker? Should the taxpayers' money go on supporting something that is a proven failure? Do we believe that Giro is capable of operating this business?
497 Is Giro capable of operating not only with an integrated range of personal customers but in the grandiose world of the corporate sector, with only 14 more people? The Minister of State said that he would see that Giro used prudence, tested the market, carried out detailed studies and built up expertise. I do not believe that banking is about that. It is an expertise which is built up over the generations, from the youngest school leaver to the chairman. Yet here the Government are suggesting that 14 extra people will be able to provide that expertise. In my view it will cost the taxpayer as much money in future as it already has cost them. We do not mean to criticise or to do anything other than question. We are entitled to ask whether this will work.
We know quite well that Giro has not worked so far. We know that it has been a failure. That was admitted by the Minister in his Second Reading speech. He is now saying that in some way it can work. I do not believe that the commercial judgment of the Post Office is to be relied upon when dealing in this specialised area. I am not convinced that we are right. The challenge is enormous. If we could get things right the system could work. I am not certain that we are tackling it in the right way.
The system for a 12½ per cent. return on capital after retained profits will not work. The investment is not there. How will it be there in the future? My hon. Friend the Member for Howden (Sir P. Bryan) raised the important question of Giro's record. When we look at that, what confidence can we have in the future? We should think carefully about this tonight. There is the most enormous doubt about what the Government are doing. They have made a great mess of Giro, and I have no confidence in it. The Minister of State has worked hard in Committee but has given us no confidence in the future of Giro.

§ Mr. Golding
I wish to declare an interest as Assistant Secretary of the Post Office Engineering Union.
I congratulate the hon. Member for High Peak (Mr. Le Marchant) on making the first new speech from the Opposition Benches for many weeks. The hon. Member for Arundel (Mr. Marshall) welcomed me to this late stage of the pro- 498 ceedings. I came in to hear his first contribution and decided then that I would hear over and over again the same speech we have had to listen to for weeks on this Bill. The hon. Member for Arundel referred to his seven fighting hon. Friends, but they are seven hon. Members with but a single speech.
I congratulate the Minister of State on the patience he has shown to a tedious, nit-picking and inexperienced Opposition. I have admired his patience even though, at times, he has tried mine in his attempts to educate the Opposition. I also congratulate him on introducing the Bill. The people who work in Giro and many other Post Office employees welcome the extension of facilities. We appreciate that those who represent bankers will try to deny this extension of public enterprise and we appreciate the motive behind their opposition. But those with the interests of the Post Office and Giro at heart very much welcome the action of the Government.
I echo just one faint criticism of the Opposition and that is at the lack of interest shown by the Treasury in this Bill. I want the Treasury to support Giro by giving it more Government business and to press for Giro to be included in the clearing banks system. Otherwise, I congratulate and thank the Minister. We in the Post Office strongly support this Bill.

§ Mr. Viggers
In their White Paper, the Government said they had decided upon a number of measures designed to set Giro on a surer foundation. That is the language of people who think a banker is someone who receives money, pays it out and keeps a percentage of the total amount. In fact, banking is a high-risk business. Lending is easy enough, but getting the money back can be very difficult—ask the manager of any clearing bank.
Credit cards are expensive to launch—ask Access. Foreign exchange operations can result in massive losses even though they are well run—ask Hill Samuel about Herstatt. Commercial lending can cost money, however reputable the borrowers—ask the people who lent money to the Mersey Docks and Harbour Board.
The more we look at this Bill, the more we come back to one question—why? Why this Bill? Why this measure 499 to extend the State-owned Giro into commercial banking?
Is it for money, for profit? It is intended that Giro should return 12½ per cent. per annum on £13 million. That is £1,625,000 a year, which is peanuts by the standards of this House. As we all know, we are the last of the big spenders. We know that Giro has made a loss in four out of the last five years. In 1970–71 there was a loss of £6 million, followed by losses of £6.4 million, £5.1 million, £4.1 million and, although a profit of £60,000 was shown for last year, my hon. Friend the Member for Tynemouth (Mr. Trotter) has demonstrated that the adjusted figure gives a £2.5 million loss. We cannot be going into this venture for profit.
Are we expanding Giro to build on management success? Once again, I am indebted to my hon. Friend the Member for Tynemouth for pointing out that in 1969–70 the auditors of Giro said that a satisfactory system of control of Giro's operations had not been established. The next year, they said that further improvements were necessary. The following year, they commented that weaknesses remained to be overcome before the level of control could be considered satisfactory. The next year, the auditors found that the level of control could still not be considered as satisfactory. Two years ago, they said the Giro accounting and control system had to be improved before it could be said to be working effectively. Last year they talked about reconciliation problems persisting. So it is not to build on management success.
Perhaps it is to absorb spare capacity in the Post Office. Are the telephone systems and the postal deliveries so good that the Post Office can take on new tasks? I think not. Is it to improve the money transmission service of the Post Office Giro? No, it is not, because the powers now being taken are the powers of a full State bank.
Why, then, do we have the Bill? The answer is clear. The Socialists are going into banking. I have one regret. The money they will use is ours. This is yet another sad and expensive parliamentary occasion.

§ Mr. Nelson
I was a member of the Standing Committee and I have been present during the interesting debate today. We have heard inadequate replies from the Minister. When we coaxed him to explain the necessity for Giro to extend its arms into the general banking service, we heard the way in which he had decided to write off massive amounts of public debt and the way he had decided to set the Giro objectives.
The comments made by the hon. Member for Newcastle-under-Lyme (Mr. Golding) are totally uncalled for, and symptomatic of the profligate and ridiculous attitude of Government supporters. To accuse Opposiion Members of being nitpicking when we are seeking to ensure that taxpayers' money is preserved and liability is mitigated is totally irresponsible. To suggest that Opposition Members represent anyone other than their constituents is a grave allegation.
I share the claims and fears expressed by my hon. Friends that the Bill is the first step towards a State bank. I maintain the firm conviction that it is not part of the Government's responsibility to expend taxpayers' money in providing risk capital for industry, and that where the Government provide such assistance it should be on the shortest terms of expediency and should be returned to the private sector at the earliest opportunity.
The most significant factor to emerge from the debate this afternoon is that there is to be no limit on the development of Giro over the next few years, there is to be no limit on the amount of business that it may take on, and no limit to the services that it may provide under the umbrella of being a bank. Therefore, it is a State bank.
I shall be disappointed if my hon. Friends decide not to vote against the Third Reading. Clause 1 goes to the heart of the matter in extending Giro's banking services. The Bill is thoroughly unacceptable and unsatisfactory. It is the first step to a State bank, and, as such, it is totally unwarranted and undesirable.

§ Mr. Peter Rees
It is with great pleasure that I speak following my hon. Friend the Member for Chichester (Mr. Nelson). As I listened to his cogent 501 contribution, I wondered whether I was justified in intervening. This small Bill, modestly introduced by the Minister of State, with his usual charm and persuasiveness, raises certain principles and poses certain questions of great importance. The House should not let go of the Bill until those principles and questions have been thrashed through to a conclusion.
In his speech in the Second Reading debate, the Minister of State justified the measure on the basis that it would introduce an element of competitiveness and stimulate competition in banking. He was rash enough, in advance of his right hon. Friend the Chancellor of the Exchequer, to mention that Giro could also make limited overdrafts available to local authorities and nationalised industries. That possibility opens up an interesting area. I have searched in vain through the White Paper on Public Expenditure to see exactly where these figures are reflected. That is a matter which we must pursue to a conclusion.
I go back to the initial premise that the measure is designed to stimulate competition in banking. Where does the Minister of State feel that the joint stock banks have failed? The Giro service may have reached certain sections of our community that have not, until now, availed themselves of the services offered by the joint stock banks. I conceive it to be patronising in the extreme to imagine that our fellow countrymen will not in course of time come to appreciate the benefit and value of the services offered by the joint stock banks, and to imagine that they can be fobbed off for all time with a kind of subsidiary fringe banking service. That is what underlies the speech advanced by the hon. Gentleman on Second Reading.
If it be right to allow the Post Office to compete with private enterprise, surely by the same token it must be right to let private enterprise compete with the Post Office. Perhaps there is a new dimension to the debate—this may be my sole justification for intervening—because since the Second Reading my hon. Friend the Member for Eastbourne (Mr. Gow) has introduced a modest measure to deprive the Post Office of its monopoly.
I say at once that I recognise that the Post Office, according to its lights. 502 performs a very valuable service for the community. I respect individually those I know who work in it—even the hon. Member for Newcastle-under-Lyme (Mr. Golding), who made such a brief, transient and embarrassed intervention in the debate. Where is he? I gather that he is beyond the Bar. Let him come into the body of the Chamber rather than retire into the shadows. We should, I am sure, like to hear more from him on behalf of those for whom he has worked for so long. He has never been modest in our debates. Why, on this occasion, should he be so coy? I am glad that we have now flushed out the hon. Member.
The point I make—it was most ably deployed by my hon. Friend the Member for Eastbourne—is that competition is fine, but it must not be limited to the private sector. Let us start looking with a sympathetic but critical eye at every field of national endeavour. Let us look at the law, in which, on occasions, I am permitted to practise. A Royal Commission is to consider whether there is sufficient competition there. Let us look at the National Coal Board—

§ Mr. Canavan
And the Army.

§ Mr. Rees
That is a very interesting suggestion, but I seem to recall that the Home Secretary felt that a certain monopoly should be exercised in this field, and that those—imbued with the spirit of free enterprise—who went out to offer their services in West Africa should not perhaps enjoy the commendation of their fellow countrymen. I happen to disagree with that. I am not saying that a very notable contribution—

§ Mr. Speaker
Order. I do not understand how they are connected with Giro.

§ Mr. Rees
I stand rebuked, Mr. Speaker. Perhaps I was prompted, encouraged and incited by the hon. Member for West Stirlingshire (Mr. Canavan) to follow a rather interesting sideline that was not exactly parallel with the theme I wish to pursue, although it may well be that those who are fortunate enough to be engaged for service in Angola use the Giro service. I do not know. That is something for the Minister to follow up in his concluding remarks.
I wish to get to the main theme, which is an important one and could engage us 503 for very many hours more were we to thrash it through to a conclusion. If it is right that the Post Office should compete with free enterprise, is it not right that free enterprise should compete with the Post Office? More than that, is it right that the Post Office should compete in this field with unlimited access to public capital?
I have searched the White Paper on Public Expenditure in vain to see whether the £28½ million is accurately reflected in it. If it be so, there are some very modest amounts indeed left for the Post Office. For 1975–76 I see a mere £60.9 million, for 1976–77, £74 million, and then a drop to £67 million in 1978–79. I ask the Minister whether these figures include the capital that is committed to the Giro service.
It may be that it was at this point that the "tiny Chinese minds" of certain Government supporters who sit below the Gangway revolted. Perhaps on this occasion I should declare a certain sympathy with them. They may have felt this to be a misuse of public resources. There are many other projects to which public capital could be committed. Perhaps the rules of order do not permit us to compare the relative merits of committing that amount of capital to education rather than to Giro. However, I hope that the Minister will try to deal with that point in his reply.
Experience in this House, whether individually or collectively, in supporting the Government of the day in the banking area has not been particularly happy. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has drawn attention to individual ventures in this respect which, alas, have tarnished the fair reputation of right hon. Gentlemen who serve in this House. I do not want to explore that point any further. However, it is fair to say that we have debated in the past, and may debate again in future, the role of the Crown Agency. I suggest that that demonstrates that emanations of Government have not so far proved particularly successful in this respect.
Why are we to suppose that Giro, launched as a fully-fledged fringe or secondary bank, is likely to be any more successful? Why should we assume that 504 those who have been blessed with a modest amount of success in the Giro service up to the present are now likely to be more capable of judging the creditworthiness of individuals, local authorities or nationalised industries than the joint stock banks have been? These matters are wrapped in inpenetrable obscurity.
I have read the debates in Standing Committee. I pay tribute to my hon. Friends who put forward many excellent points without receiving very much in reply from the Minister of State. I hope that on this occasion he is better briefed. His remarks have not ridden easily with the remarks made outside the Chamber by Mr. Singer. It seems that the Minister of State is not aware of what those who may be managing the enterprise are doing and saying in his name.

§ Mr. Gregor Mackenzie
With great respect, it was not in my name. My name it attached to the Bill as it appears before the House. I am not responsible for what appears in newspapers.

§ Mr. Rees
That was a most interesting intervention. Then where lies the constitutional responsibility? Is the Minister of State disowning Mr. Singer? I hope that he will explore this point in his reply, for he has made a most curious statement. We must surely be told what is the constitutional responsibility for the Giro service. Are we now to understand that Giro is entirely autonomous and that we cannot question anything said by the executive head? That is a curious proposition indeed.

§ Mr. A. P. Costain (Folkestone and Hythe)
On that important issue the House is surely entitled to know who is the accounting officer responsible in this respect to the Public Accounts Committee.

§ Mr. Rees
My hon. Friend, with his usual clarity, has put his finger on the precise point at issue. The Minister of State sometimes gets carried away on the subject of small industries. Certainly tonight we are dealing, not with a small industry but with a venture that will take £28½ million of our money. But apparently the Minister disclaims responsibility for the statements of Mr. Singer.

§ Mr. Gregor Mackenzie
Let me make it clear. I said that I am not responsible 505 for any articles that appear in a newspaper. I have read the article with some care. I have not discussed the particular passages, the headline passages, with Mr. Singer or anyone else—

§ Mr. Rees
Why not?

§ Mr. Mackenzie
These are matters that we have discussed. We have been here much of the day and this point has been gone over time and again. But I cannot be responsible for the Manchester Guardian.

§ Mr. Rees
This is the most curious pronouncement that I, in my short career in this House, have ever heard from the Government Front Bench. We are debating an important Bill, and the Minister disclaims any knowledge of or responsibility for a statement by the chairman—not the chairman-designate but the chairman actual—of the organisation whose affairs we are debating. The Minister's officials are not keeping him fully informed. The paper is no longer the Manchester Guardian, but The Guardian. With his regional knowledge, the Minister must appreciate that The Guardian has now become a cosmopolitan newspaper.
But it is not only The Guardian that is concerned. Let me refer the hon. Member to this quotation from the Financial Times: Giro chief outlines the basis for massive State bank". Does that come as a brutal shock to the Minister? We must know more about this. We are well used to the right hand of this Administration not knowning what the left hand is doing, but we are debating a Bill designed to increase the powers and the capital of a "para-Statal"—I believe that that is the "in" term—organisation, and the Minister comes blushingly to say that he accepts no responsibility for what Mr. Singer is saying.
What does he accept responsibility for? What kind of bank does he foresee this to be—

§ Mr. Gregor Mackenzie
It is all here.

§ Mr. Rees
It is no good the hon. Member's waving a copy of the Bill at me. I have read the Bill and the debates in Committee. This is something with which we toyed, but how will it develop? I was disposed to believe that the Mini- 506 ster, with his characteristic Glaswegian understatement, would launch it as a kind of modest Clydeside Trustee Savings Bank. I was going to compare his approach with the more manic approach of the Secretary of State for Energy. Another twist of the ministerial wheel and the right hon. Member for Bristol, South-East (Mr. Benn) could be in charge of this bank. If he is, in conjunction with Mr. Singer, he will see that it becomes a massive State bank. Then we shall have to look to East Berlin to see what a people's bank can achieve—

§ Mr. Russell Kerr (Feltham and Heston)
What do you know about it?

§ Mr. Rees
The "tiny Chinese minds" of the hon. Members below the Gangway are at last being brought to bear on this crucial point. The debate is livening up. Until now, we have been deprived of the pleasure of hearing what the "tiny Chinese minds"—or rather, big Chinese minds—have to say.

§ Mr. Speaker
Order. The hon. and learned Gentleman has a rare gift for raising the temperature, but on Third Reading of a Bill we confine ourselves to what is in the Bill. There is nothing in the Bill about "tiny Chinese minds".

§ Mr. Rees
Mr. Speaker, I stand as always chastened and corrected by your adroit touch. May I make it clear, in case any gentlemen from the Chinese Embassy are present, that I have always regarded Chinese minds as capacious and far-seeing? It is only a very special kind of Chinese mind that is represented below the Gangway on the Government side.
To resume, I had credited the Minister with a very modest intention, but I now see that, sheltering behind the gigantic figure of Mr. Singer, he is launching a financial monster on the world. This monster should be quietly put to rest. That would be an act of infanticide with which the country would entirely agree.

§ Mr. Gregor Mackenzie
I have listened to many speeches today with considerable interest and not least to the speech of the hon. and learned Member for Dover and Deal (Mr. Rees). His was far and away the most entertaining speech I have heard on this subject in many a long day. However, I found it difficult to relate some of the contents of the hon. and 507 learned Gentleman's speech to the Bill. It was extremely exaggerated and highly entertaining, and I am sure that from that point of view we appreciated it greatly—but only from that point of view.
As always, and as we expected, the hon. Member for Arundel (Mr. Marshall) made a very thoughtful speech. He believes, as do many of his hon. Friends, that Giro provides a useful service. Indeed, that was the conclusion reached by the Administration when Mr. Christopher Chataway was the Minister of Posts and Telecommunications.
When introducing the Bill I adopted the attitude that Giro made a useful contribution. However, in addition to providing a money transmission service it must be allowed to provide for its clients the banking service which many of them require—no more and no less.

§ Mr. Michael Marshall
The Minister has just said "the banking service which many of them require". Will he give us some evidence of this? As he knows, we have pressed for this evidence again and again.

§ Mr. Mackenzie
Throughout the time I have held my present post, and apart from the exercises done by Marplan and Lancaster University, I have travelled throughout the country and met people associated with Giro. They have constantly asked whether it can provide a modestly expanded service. That is what is proposed in the Bill.
Hon. Gentlemen have suggested that suddenly as a result of the Bill becoming law—if that is the will of Parliament—Giro will explode into something massive. I want Giro to grow, and I have taken that view for many years. However, I have always wanted Giro to grow surely and soundly. Indeed, that is the way for any organisation of this kind to grow and prosper. That is why we made it clear in the White Paper that the schemes which the Post Office puts to the Department of Industry will be examined with the greatest possible care by the Department, the Treasury, and the various monetary authorities. It will be only on that basis that schemes will be launched. In any event, there will be pilot schemes.
Many hon. Members have tried to snipe at the managing director of Giro 508 through me. As I have already said, I am not responsible for what appears in the newspapers. I am not certain that Mr. Singer was properly reported. All I know is that through the Bill we are trying to ensure that there is a modest growth of the banking services. I believe that such a service will fulfil a number of useful functions.
About 50 per cent. of the British people do not use banking services of one kind or another. I believe that the provision of this service will encourage these people to save money. Throughout the country there are a great many post offices which are conveniently placed. I believe that many of these post offices could encourage people to use Giro and to bank with it.
My hon. Friend the Member for Thornaby (Mr. Wrigglesworth) reminded the House that Giro provides a convenient method of conducting business. As the hon. Member for Bridgwater (Mr. King) well recalls, at the end of the review in 1972 it was recognised as a convenient way of doing business and as something which should continue. Either we must allow the continuation of Giro, modestly expanded, or stop it completely as the hon. Member for High Peak (Mr. Le Marchant) would want. He and some of his hon. Friends do not like Giro or the Post Office, but they cannot expect me to support their point of view.

§ Mr. Le Marchant
The Minister said that there was no precedent for parliamentary approval of targets set by Government for the nationalised industries. This is an example of vast Government expenditure which will bring no return to the taxpayer.

§ Mr. Mackenzie
I am not sure what that has to do with the comments I have been making in my Third Reading speech. The hon. Gentleman criticises Giro, but it is now making a profit. It has met the two objectives which were set by the former Minister of Posts and Telecommunications. I should have thought that that in itself would have been a source of satisfaction for the hon. Member.
My hon. Friend the Member for New-castle-under-Lyme (Mr. Golding), who is an old and staunch supporter of Giro, has indicated the steps that he hopes it will take in the future. He shares many of 509 my aspirations for Giro. The hon. Member for Gosport (Mr. Viggers) puzzled me by his concluding sentence when he said that the Socialists were going into banking now. We have had a banking service of the kind operated by Giro for a long time. It was the subject of a considerable and lengthy review by the previous Conservative Administration. They decided that it should continue, and we are simply clarifying the position—no more, no less.
I believe that Giro gives an excellent choice. It is competitive with the banks, but I have had no significant complaint from any of the clearing banks that Giro's small operations will be a threat to the Midland, the National Westminster or any of the others.
The hon. and learned Member for Dover and Deal asked me about the Post Office monopoly. I should incur the wrath of the Chair if I were to deal with that at length. It is not many days since the House decided to look at this question and refused to agree to a Bill which would break up the Post Office monopoly. But, of course, it is open to anyone to make representations to the Carter Committee, which is reviewing the whole question of the Post Office. The whole range of services is now under review, including Giro, the postal service, and telecommunications. The gentlemen who are conducting the review will be prepared to listen to the evidence and will make recommendations to me on that basis. I cannot, however, see what the monopoly of the postal service has to do with this Bill.
It is a good Bill which allows a modest extension of the service of Giro. I am sure that it will be welcomed by the

§ Mr. Tim Renton
My hon. Friend the Member for Gosport (Mr. Viggers) is right. The Socialists are going into banking.