HC Deb 16 April 1980 vol 982 cc1206-13
The Secretary of State for Industry (Sir Keith Joseph)

With permission, Mr. Speaker, I understand that it would meet the wishes of the House if I were to make a statement about impending changes in the senior management of the Post Office.

Sir William Barlow has made excellent progress with the administrative prepartions for the legislation that the Government intend to introduce soon to separate the Post Office into two corporations.

Sir William knew that I hoped that he would become the chairman of British Telecommunications, but to my great regret told me shortly before Easter that he would prefer to resume his career in the private sector. Sir William has my respect and admiration for what he has achieved and sought to achieve in the Post Office during the past two and a half years. His departure later this year will be a loss to the public sector, though I have no doubt that it will be a gain for private industry.

I also announced yesterday that after consideration of a number of possible candidates I would appoint Mr. Ronald Dearing, a deputy secretary in the Department of Industry, to be a deputy chairman of the Post Office and chairman-designate of the postal business.

Mr. John Silkin

Opposition Members regret that Sir William Barlow felt it necessary to offer his resignation on this occasion.

Mr. Arthur Lewis

Speak for yourself.

Mr. Silkin

My hon. Friend the Member for Newham, North-West Mr. Lewis) must take up his fight in his own way. I am speaking for the majority of Opposition Members. The manner in which Sir William Barlow is going, the very soothing words uttered by the Secretary of State, and the chivalrous words of Sir William are reminiscent of the situation when Sir Leslie Murphy and the NEB were sacked.

Will the Secretary of State confirm that there were differences of opinion between the Government and Sir William Barlow, particularly on three issues? First, will he confirm that there were differences of opinion about the investment programme? Is it not a fact that in 1979–80 the Post Office was compelled to repay £110 million? Is it not also a fact that this year's cash limit has been rigorously imposed and that Sir William believed that it was necessary to increase the investment programme? All those who are waiting for telephones no doubt share that opinion.

Secondly, is it not true that Sir William believed that the rigid and unimaginative cash limits imposed by the Government made it difficult to hold sensible wage negotiations? We have seen the effect of lunatic wage negotiations in other industries, particularly the steel industry.

Thirdly, is it not a fact that Sir William was utterly opposed to the break-up of the Post Office monopoly, because he saw the danger to the rural letter service? He was equally bitterly opposed to the attempt to destroy the monopoly in telecommunications of the maintenance and installation services.

Finally, the Secretary of State has often said that he believes in a policy of Government non-intervention in management. Can he believe that imposing impossible cash limits on shipbuilding, the steel industry and the Post Office, and the sacking of the NEB and Sir Leslie Murphy along with the forced—that is how we see it—resignation of Sir William Barlow is non-intervention in management? If he believes that, he has a very idiosyncratic view of nonintervention.

Sir K. Joseph

The short answer is "No". There has not been a series of such disagreements between Sir William, myself and the Government. The exact reasons for Sir William's resignation—which I very much regret—are for him to give.

It is true that cash limits—introduced by the previous Labour Government—impose a discipline, particularly on nationalised industries. Chairmen of nationalised industries, particularly of those that are successful, such as the telecommunications part of the Post Office, are irked by restraint on desirable investment. At this stage I draw no implications for British Telecommunications. However, it is all the more sensible, where practical, to introduce private capital in order to lessen borrowing—where necessary—on the public sector borrow- ing requirement. There is no truth in the allegation that there was a wide difference of opinion about the Government's decisions on the Post Office monopoly—largely because the Government have not yet made any final decision.

Sir William Barlow would have liked a bigger investment programme. Indeed, we would have liked a bigger one. We are examining ways in which the Post Office can have a larger telecommunications investment programme within cash limits. I do not see the benefit of having cash limits—introduced by the previous Labour Government—if they are slack and imaginative, as opposed to what the right hon. Member for Deptford (Mr. Silkin) would be pleased to call rigid and unimaginative. What is the point of having them if they are slack and flabby?

Mr. Silkin

Will the Secretary of State tell us—as he has not answered my question about non-intervention in management—how it is possible to provide the 222,000 telephones that are now required, without a new investment programme? How can that be achieved within the rigid cash limits?

Sir K. Joseph

There are a number of ways in which the cash flow of nationalised industries can be improved, including higher productivity in particular, and better co-operation between managements and the work forces. But in addition, the investment programme can be increased beyond the retained cash flow of the organisation, to the extent that we can introduce private capital and reduce the claims on the public sector borrowing requirement.

Mr. Cyril Smith

While accepting that Sir William did not disagree with the Minister on the monopoly of postal services since that decision has not yet been made, may I ask whether Sir William expressed a view about what that decision should be, and whether the Minister gave any indication of what the decision might be? In the light of that, did those considerations have any effect on the resignation?

Sir K. Joseph

That question must be for Sir William. As far as I am aware, the answer is "No". Sir William was aware of my thinking about the changes that might be introduced, and I was certainly aware of his reaction to that thinking and have taken it into account.

Sir Paul Bryan

Has Mr. Ronald Dearing been warned of the truly catastrophic situation that he is likely to be asked to take over in 18 months? Is not the Post Office being asked to provide services that are well beyond its depleted powers and beyond those required in most other countries? Should not a new appraisal of the Post Office's future be made before Mr. Dearing is asked to take over?

Sir K. Joseph

I am slightly puzzled about the reference to 18 months ahead. Mr. Dearing has unrivalled knowledge from outside the postal service of the problems, since he has been the deputy secretary in the Department of Industry involved in Post Office policy. I believe that my hon. Friend is concerned about the split when he refers to "18 months". I do not share his view that that split will produce the cataclysmic situation that he fears. Mr. Dearing has had the stalwart character to take a one-way ticket out of the Civil Service into what inevitably will be a demanding and exposed job, and all credit to him.

Mr. Golding

Is the Secretary of State aware that while the Post Office Engineering Union has strongly disagreed with Sir William Barlow over his opposition to industrial democracy and a shorter working week, it believes that he has been right to oppose Government policy on cash limits at their present levels, the proposed creaming off of traffic to private wires, and taking away the rights of exclusive service to install and maintain equipment? Is he aware that the union believes that Sir William has been right on these matters, and it is known that he has done this in order to defend the postal monopoly?

Sir K. Joseph

I am glad that voices other than mine have been raised in tribute to Sir William.

Mr. Cormack

Will my right hon. Friend accept that while we wish Sir William well in his personal future, not everyone on the Government Benches will be devastated by his departure? Will he also accept that the one thing that Sir William has manifestly failed to achieve is a first-class postal service? Will he ask Mr. Dearing to give his early and urgent attention to achieving a first-class postal service or to abolishing the non- sensical two-tier system that we have at present?

Sir K. Joseph

I am not sure that my hon. Friend and those who support him fully appreciate the difficulties of managing some of our nationalised industries, particularly where the trade union membership refuses to accept the advice not only of their management but of their trade union leaders in improving services to the public.

Mr. Arthur Lewis

The Secretary of State said that Sir William voluntarily resigned of his own free will and volition, and, of course, Sir William has admitted that. Can we be assured that as he will be getting a fabulous index-linked pension, the taxpayers will not be expected to give him a golden handshake, when everyone knows that the postal services today are worse than they have been at any time in the past 50 years?

Sir K. Joseph

The degree to which the postal services are worse than they have been is not the fault of Sir William, who has striven very hard to secure the co-operation of the postal trade unions in improving the service to the public. I suspect that Sir William will be able to earn substantially more in the private sector than he earns as chairman of the Post Office.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call those hon. Members who have been rising in their places since the statement was made.

Mr. Tapsell

Before my right hon. Friend reiterates too confidently his statement about the success of the telecommunications side of the Post Office, will he bear in mind that those who work in the City of London and earn substantial amounts in foreign exchange for this country now have to operate what is probably the most inefficient telecommunications service in any major financial centre? Is he aware that if these people wish to make a telephone call to many of the other financial centres they have to send a telex message and ask them to make the call?

Sir K. Joseph

I do not criticise what my hon. Friend says. There are many improvements that Sir William and the Government would like to achieve in telecommunications. The investment programme is part of the problem, and that is why we seek ways to enable it to grow.

Mr. John Evans

Is the real truth the fact that the chairmen of the nationalised industries are finding it increasingly difficult, if not impossible, to work within the ridiculous framework laid down by the Secretary of State? Is it not also true that in the not-to-distant future there are likely to be further resignations of chairmen of nationalised industries? Would it not be better if the Secretary of State asked Sir William to stay in the Post Office and, for the sake of British industry, resigned himself?

Sir K. Joseph

In that long question the hon. Member did not propose anything to replace cash limits. If he were to suggest denationalisation we might listen to him.

Mr. Jessel

Is there likely to be any improvement in the postal services now?

Sir K. Joseph

I must weigh my words carefully here. Sir William, Mr. Ronald Dearing and I all have the same purpose—to improve the postal service. It is now a question of the extent to which the membership of the relevant trade unions co-operates with management in achieving this.

Mr. Harry Ewing

Why is the Secretary of State trying to cover up this matter? Why will he not admit openly that his own bungling interference has brought about this situation in the Post Office? When the Secretary of State tells the House that the £110 million that the Post Office had to repay to the Treasury was primarily from the profitable part of the organisation, namely, the telecommunications business, does he not understand that £80 million of that £110 million came not from the telecommunciations side but from the postal side of the business? Finally, can he explain why, since he became Secretary of State, he has spent a great deal of time attacking the postal service? How on earth can he expect the people who work in that industry to have confidence in the job that they do? Will he get someone to preside over the industry to give them pride in their jobs?

Sir K. Joseph

I do not habitually blame all problems on the trade unions, but the habit of the Opposition in ignoring the contribution of trade unions to the problems is going too far. The loss of the Post Office was to a large extent caused by the billing dispute, which cost the postal service nearly £100 million in interest on borrowed money. I think that the loss in the postal service would have been much reduced if the trade unions concerned, particularly the postal trade union, had co-operated in achieving higher productivity to offset the sheer increase in costs involved in their wage claim.

Mr. Peter Bottomley

Is my right hon. Friend prepared to comment on the difficulty apparent in the last few years in recruiting and holding successful chairmen of nationalised industries?

Sir K. Joseph

I shall have difficulty in restraining the length of my answer. First, the job is inherently very difficult in managing an industry that is not subject to the disciplines of competition or the threat of bankruptcy. Secondly, it is not always possible to obtain the best person—although I believe that we have done so in the postal service—to head these industries at the level of pay at the present standard. Those are two difficulties, to begin with.

Mr. Cryer

Is it not the case that if Sir William Barlow went to an unfair dismissals tribunal his leaving would be regarded as constructive dismissal? Have the trade unions been consulted on the new appointment? Why was the post not advertised? Why do those who get into these jobs with fantastic salaries—fantastic compared with the pay of an ordinary postman—come from the magic circle in his office?

How does the Secretary of State expect the ordinary postal and telecommunications workers to co-operate when they see a chairman appointed from his little clique to preside over the destruction of the Post Office as we know it?

Sir K. Joseph

I scarcely know where to start on that series of imaginative allegations. First, there is no question of dismissal, constructive or otherwise. I am sad that Sir William Barlow has decided to go, but he prefers the cut and thrust of the private sector to the monopoly world of the public sector.

Secondly, surely it is in the interests of the average postman and telephone worker to have good management and to co-operate with good management. That is how so many wage earners abroad have achieved a standard of living very much higher than that of our wage earners.

Mr. Ioan Evans

In view of the uncertainty that the resignation has caused in the Post Office, which is one of the largest employers in the country, when can we expect the legislation that will separate the postal side from the telecommunications side? As the right hon. Gentleman's cash limits have provoked a dispute in the steel industry and are provoking a strike in British Leyland, does he expect them to provoke an industrial dispute in the Post Office?

Sir K. Joseph

Cash limits are bound to create difficulties but they are nevertheless essential if we are to control public borrowing and, through that, inflation. I hope that the legislation will be introduced soon, but that is not a matter for me alone.

Mr. Les Huckfield

Does the Secretary of State not realise that ever since he took office he has not had a good word to say about the Post Office? He even agreed with the stupid and inaccurate remarks of the hon. Member for Horn-castle (Mr. Tapsell). How can the right hon. Gentleman be so complacent about cash limits and the investment programme when the latest figures show that at least 60,000 people have been waiting for telephones for at least six months? How could he have expected Sir William Barlow to continue as chairman when the right hon. Gentleman has continually undermined confidence in the Post Office?

Sir K. Joseph

I have sought to represent the consumer's reaction to the Post Office, and I have had plenty of evidence that the consumer has been dissatisfied with the postal service.