HC Deb 16 July 1980 vol 988 cc1494-509
The Secretary of State for Industry (Sir Keith Joseph)

With permission, Mr. Speaker, I should like to make a statement about the postal monopoly.

The House will recall that on 2 July 1979 I stated that if co-operation to improve postal services were not manifest it would be necessary to review the Post Office's monopoly for the carriage of letters, and that I would call for reports of possible modifications to that monopoly, their practicability and implications, by the end of the year.

I have received a report from the chairman of the Post Office and a report from officials in the Department who consulted widely with persons and organisations throughout the United Kingdom with an interest in the postal service. In addition, my right hon. Friend the Secretary of State for Trade referred the inner London letter post to the Monopolies and Mergers Commission. The commission's report was laid before Parliament on 31 March and was published on 1 April. The Government have been discussing with the Post Office its response to this report, and I intend to lay before Parliament shortly the Post Office's programme of action to meet the commission's recommendations.

Members of the House will be aware of the widespread criticism of the postal service, particularly in the summer of 1979. I am glad to say that recently the quality of service to the customer, as measured by the statistics furnished by the Post Office, has shown a marked improvement, particularly in April and May this year. The service is now close to the Post Office's own target. It has, moreover, been encouraging to hear of the decision of the Union of Communications Workers to discuss with the Post Office measures to improve productivity and to bring about more efficient working.

However, for some time it has been clear that the monopoly is more extensive than is sensible and that there are uncertainties in some of the key definitions in the Post Office Acts of 1953 and 1969. I have therefore decided that some changes are desirable. In coming to that decision I have taken into account the views expressed by those whom we consulted in the course of our review, the Post Office's own report on the monopoly, the views expressed by the Monopolies and Mergers Commission, and the quality of service received by the customer.

There are certain categories of mail that it would be beneficial to remove from the monopoly. When the necessary legislation has been enacted I intend to relax the monopoly in certain respects.

First, in respect of time sensitive/valuable mail, private operators will be free to carry such mail provided that they charge a minimum fee subject to review by the Secretary of State. I propose that this minimum fee should initially be £1.

Secondly, on document exchanges, at present the document exchanges established in a number of the larger cities are able to operate only an exchange of mail at a common centre, and may not transport mail in bulk between those centres. It is intended to amend the law so as to enable them to do this. Thirdly, on Christmas cards, the Government propose to amend the law so as to allow charitable organisations to deliver Christmas cards.

In addition, the Government propose to amend the law relating to the monopoly in a number of other fields. First, in relation to the definition of a letter, it is intended, with the help of the Post Office, to specify that a number of items are excluded from that definition so that those wishing to compete with the Post Office will not be deterred by confusion about the precise extent of its exclusive privilege. Secondly, in relation to part carriage by private operators it is intended to amend the law to allow that where a letter at some stage goes through the Post Office network it may be carried for part of its journey by private carriers, provided that it is first stamped. This will enable the large customer some freedom to avoid his mail being handled in those parts of the Post Office network known to give rise to delays.

Thirdly, the law will be amended in relation to delivery by a wholly owned subsidiary. At present there is no obstacle to individuals or companies delivering mail on their own account, but it appears that a wholly owned subsidiary cannot deliver mail on behalf of its parent or of other companies in the same group. It is intended to amend the law to rectify this anomaly. Fourthly, in relation to addressed advertising and other new market demands, the Government will watch how the Post Office reacts to such market demands and will, if justified, make appropriate relaxations of the monopoly.

In addition, the Government will seek to amend the law relating to the Post Office letter monopoly in order to provide powers for the Secretary of State to make further relaxation in respect of certain categories of mail. Moreover, we shall seek powers to remove the monopoly, either in a local area or nationally. These powers will rest in my hands. [Interruption.] I would intend to use them in the event of industrial action within the Post Office which resulted in a cessation or serious decline in the quality of service. I would also use the powers if, after due warning, the Post Office failed, for reasons within its control, to satisfy me as to its performance in serving the public.

In deciding whether to use my powers I shall take into consideration the Post Office's record in relation to productivity, unit costs, quality of service to the customer and its financial target. I am starting discussions with the chairman of the Post Office on whether the targets for the quality of service of first-and second-class mail are sufficiently rigorous.

I believe that these measures will stimulate greater efficiency within the postal service. Taken together, they clarify the law, open up to competition some parts of the postal monopoly, and safeguard the general interest of the customer by making it clear that the letter monopoly is a privilege that the Post Office needs continually to justify through the quality of the service that it provides. These changes will require legislation, and the Government will bring proposals before the House in due course.

Mr. John Silkin

The Secretary of State began his statement by saying that on 2 July 1979 he had stated that if cooperation to improve the postal services were not manifest it would be necessary to review the Post Office's monopoly. He then told the House that he was glad that the quality of the service to the customer, as measured by his own criteria, had recently shown a marked improvement. He congratulated the workers concerned and the Post Office on that improvement. That makes the whole of his statement quite unnecessary.

At this stage I shall not deal with the peripheral matters to which the Secretary of State referred. In any event, some of them have the most peculiar names and will need some consideration. We shall deal with them when the legislation comes before the House. At first glance they represent a pretty good pirates' charter. The real guts of the statement lie in the powers that the prophet of Government non-intervention has raised before us. The House will enjoy very much the phrase These powers will rest in my hands. Those hands have been pretty guilty of messing about with British industry over the past 14 months.

Perhaps the Secretary of State will listen to my questions, as he has a habit of not answering questions—

Mr. Russell Kerr

Megalomanics do not listen.

Mr. Silkin

Does the Secretary of State not appreciate that in every civilised community in the world the letter service is a monopoly of the State? Does he not realise that most postal services in other countries are subsidised by the State—in Germany, France and the United States to the extent of $1,000 million a year? Does he not realise why this occurs. It occurs, first, because it is uneconomic in rural communities to have a private postal service. Secondly, it is in the interests of industry, commerce and export that the postal service should be as cheap and efficient as possible. This can be done only by a postal monopoly. That is the basis on which every civilised country works its service.

The Secretary of State referred to the report made by the Monopolies Commission. Is he not aware that in paragraph 12.3 of that report the commission says that there is no evidence whatsoever against the monopoly and indeed, that all the evidence is in favour of it?

Sir K. Joseph

I am not responsible for postal services abroad. The service here has improved, but it is not yet good enough.

Mr. Speaker

Sir John Eden.

Mr. Silkin


Mr. Speaker

Order. I have called the right hon. Member for Bournemouth West (Sir J. Eden), but if he does not mind, I shall call the Front Bench again.

Mr. Silkin

I wonder whether the House considers that brief reply a sufficient answer to the questions put to the right hon. Gentleman. Will the right hon. Gentleman now have the guts to answer from the Dispatch Box the questions that I asked?

Sir K. Joseph

I am not responsible for services abroad. I do not know, and the right hon. Gentleman has not told us, whether those services are satisfactory. They may be monopolies that are unsatisfactory to the customer. Our monopoly has been unsatisfactory to the customer. It has become less unsatisfactory, but it could still be much better, and the customer deserves it to be much better. That is why I made the statement. As I told the House in my statement, the Monopolies and Mergers Commission's recommendations have all been taken into account in deciding Government policies.

Mr. Silkin

The right hon. Gentleman refuses to direct his mind to the question. Is it correct that the Monopolies and Mergers Commission, at paragraphs 12.2 and 12.3, stated, with only one dissenter, that all the evidence showed that the monopoly service was extremely good?

Sir K. Joseph

The service has been shown to be open to improvement. We believe that it can be better still.

Sir John Eden

Will my right hon. Friend accept my congratulations on his having taken an important first step to reduce the area of the Post Office letter monopoly? Is not the only justification for the retention of such a monopoly the high quality of service given to the user? Does my right hon. Friend anticipate that the stimulus to improvements in the service that his action will no doubt provide is likely to lead before long to the greater use of mechanised handling and the introduction of more stereotyped forms of envelopes?

Sir K. Joseph

The degree of mechanisation and the stereotyping of envelopes are questions for the management of the Post Office. I agree that the only justification for the monopoly is the quality of service to the public. It is not a right but a privilege.

Mr. Charles R. Morris

Does the Secretary of State accept that, on his own admission, postal services are improving and that meaningful negotiations on increased efficiency and productivity are proceeding between the Union of Communications Workers and the Post Office? Is he aware that Post Office workers will recognise his statement for what it is—a postal strike-breakers' charter? Will the Secretary of State confirm that the Post Office board, the Post Office Users National Council, the Mail Users Association, the Carter committee, the Select Committee on nationalised industries, everyone who has been associated with the Post Office, and this House are on record as being opposed to breaking the Post Office monopoly? What makes him think that he is right and they are all wrong?

Sir K. Joseph

In the right hon. Gentleman's lengthy catalogue he did not mention the customer. I am responsible for reconciling the interests of all those whom the right hon. Gentleman listed with the interests of the general customer.

Mr. Kenneth Baker

Does my right hon. Friend agree that his proposal to allow private carriers to take primarily business mail between different towns and cities has been the practice within London for several years, and has been carried out speedily and satisfactorily without a great loss of service for the Post Office? Will he reconfirm that the powers that he has reserved to himself will be used when the quality of service falls below the standard expected by the British public, as should be the case?

Sir K. Joseph

I agree with both my hon. Friend's propositions. I have explained to the House that I shall use the powers only if the quality of service falls below a specified level, and after due notice, in order to give the Post Office a chance to put its service right, or if there is an industrial dispute that destroys the service to the public.

Mr. Cyril Smith

Does the Secretary of State accept that, on his own admission, he has gone back on his word? In July 1979 he clearly said that he would break the monopoly only if he was not satisfied that the postal service was not improving. Bearing in mind his last answer, to what level will the Post Office's service have to fall before he considers using the powers to which he has referred? Is it correct that, when the right hon. Gentleman's statement mentions the necessity to clarify the law, it is an excuse for this action, and that the right hon. Gentleman is seeking to break the Post Office's monopoly on the postal service? Should he not therefore clearly state that? Does he accept that the sections of the postal service that he proposes to hive off are the profitable ones, and that when the income from those services is lost to the Post Office there will not be a comparable reduction in the costs of the Post Office, which is bad business practice? Will the Secretary of State accept that his threats over industrial relations are a poor way to seek better industrial relations in any industry?

Sir K. Joseph

I am disappointed that the hon. Gentleman did not refer to the customer. I have proposed to take powers to break the monopoly if the standard of performance is below the necessary level. The hon. Gentleman asks what the targets for that level will be. It may well be proper to raise the targets that the Post Office has so far set itself. Discussions are to be started between my Department, the Post Office and the Post Office Users National Council to decide whether we can reasonably expect a higher standard of performance than that represented by those targets. I do not conceal that the Government believe it right to treat the monopoly as a privilege and not as a right, to be preserved—as my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) says—only to the extent that that is justified by good performance to the public. I do not consider that the proposals significantly damage the Post Office's revenue. I am not making threats. No responsible and productive postal worker has anything to fear from what the Government have decided.

Mr. Grylls

Does my right hon. Friend agree that his prime consideration in those radical changes is to ensure that the public receives the best possible service, from the Post Office, the private sector, or both? Does he accept that we should learn that monopoly is bad in public and private industry?

Sir K. Joseph

It is extraordinary that the Opposition have not asked a single question that mentions the interests of the public. I am grateful to my hon. Friend for bringing out the fact that the postal service exists to serve the public and not the Post Office.

Mr. McWilliam

Will the right hon. Gentleman accept that if he continues with his wrong-headed attempt to milk the profitable business from the Post Office my constituents in rural areas will get a lousy service? Who will deliver the mail in Chopwell and Tynedale at the prices that will pertain? Is the right hon. Gentleman aware that the Government's wrong-headed and silly adherence to cash limits is preventing the modernisation and mechanisation of the Post Office at a pace sufficient to enable the service to be improved to meet his criteria? Will he accept that he is tying the Post Office's hands behind its back, while giving customers, apart from big business and those in the city centres, a far worse service, simply because he does not like nationalised industries and wishes to make a doctrinaire attack on the Post Office.

Sir. K. Joseph

The hon. Gentleman will regret all that rhetoric when he has had time to study what I have said. I assure the House that what the Government have decided will make no perceptible difference to the service in rural areas. The removal of the monopoly will improve the service to rural areas if the service to those areas falls so far below the target that the Secretary of State of the day feels justified in removing the monopoly.

Mr. Lee

Is my right hon. Friend aware that the whole country will welcome the Christmas card exemption for charities? Is he prepared to consider granting similar exemptions for charities' mail for the rest of the year?

Sir. K. Joseph

I should not like to encourage the charities to expect that in-increase in the load on their services. We shall have to see how the service goes.

Mr. Faulds

I have a technical question for the right hon. Gentleman. Are these other carriers to be entitled to carry their mails bearing the stamp of Her Majesty the Queen, or are they to be entitled to print their own stamps under the right hon. Gentleman's lunatic system? I think that my hon. Friends will understand, and will probably accept, that, having been in the House for 15 years, I have never heard the House treated with such contempt as the right hon. Gentleman treated it in his original reply to my right hon. Friend the Member for Deptford (Mr. Silkin). Although I am sure that the Secretary of State's colleagues make allowances for the fact that he has problems with his mental balance, why should the country suffer from it?

Sir K. Joseph

The express deliveries that are made at present do not use Her Majesty's stamps and I do not imagine that they will in future. I have announced that a stamped letter may, under the Government's proposals, be put into the postal network at a different place from where it originates. That is the only area where I am making any proposal that affects stamped letters.

Mr. Neubert

To what extent does my right hon. Friend anticipate that the Post Office will use the breaches of the postal monopoly as a pretext for abandoning some of its more social obligations to provide sub-post offices in small communities, urban as well as rural, and other lightly used but nevertheless important services, such as telegrams?

Sir K. Joseph

I do not want to exaggerate the extent of the reductions of the monopoly that I have announced. The answer to my hon. Friend is "Not at all". The significance of my statement lies more in the proposal to take powers for the Government to remove the monopoly under certain circumstances than in the announced reductions of the monopoly.

Mr. Stott

Is the right hon. Gentleman aware that my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris), my hon. Friend the Member for Blaydon (Mr. McWilliam) and I do not have any regrets about what we say on the question of the Post Office, because we were all employed by the Post Office before being elected to the House? We do not apologise to the right hon. Gentleman or to the House for what we have to say on the issue. Let me ask the Secretary of State a question that he failed to answer earlier. The hon. Member for Rochdale (Mr. Smith) asked how much revenue the Secretary of State estimated will be lost to the Post Office as a consequence of the actions and measures that he has announced.

Sir K. Joseph

It is impossible to give a figure, but it must be very small indeed. We are dealing largely with mail that does not go through the postal service at the moment. As for the amount that goes through the postal service and might be diverted, I suppose that if we leave out Christmas cards, which cannot be measured, the total will be about 1 per cent. or 2 per cent.

Mr. Bruce-Gardyne

I congratulate my right hon. Friend on preparing the ground for moving forward. In framing the legislation will he bear in mind that the preservation of the Post Office monopoly would not guarantee the survival of doorstep deliveries in rural areas for many more years? What is the justification for the minimum £1 fee? Will the scheme for fast carriage by private opertors enable them to bypass such notorious blocks as the Crewe sorting office?

Sir K. Joseph

The future of the monopoly depends on the performance of those who work in the postal service. The £1 fee is less than many of the charges now made by express carriers, but is sufficiently above the price of a first-class stamp not to prejudice excessively the postal revenue. The proposed provision will enable any remaining weak spots in the network to be bypassed in the way that I have described, but it will not remove from management the obligation to improve the management and performance at such places.

Mr. Gregor MacKenzie

Can the Secretary of State square his statement that he will take power into his own hands to break the Post Office monopoly with his often-expressed view that there should be a policy of non-intervention? Can he explain how, if he creams off the most profitable part of the Post Office, leaving it only the non-profitable sectors, such as rural services, and so on, that will improve the quality of the service in rural areas? Will he bear in mind what happened to the Secretary of State for Education and Science at the hands of the Duke of Norfolk in another place, because that may happen to him when his legislation gets through this House?

Sir. K. Joseph

Intervention means trying to do mangement's job for it. The Government's proposal in this case is far more of a policy issue of removing the monopoly if it is not justified by performance. If the right hon. Gentleman rereads my statement and considers my answers I think that he will accept that the other part of his question is not relevant.

Mr. Kenneth Lewis

Is my right hon. Friend aware that his reasonable proposals will be welcomed by the public, though some business men may think that he has not gone far enough? Will charities be allowed to set up an overall delivery service for Christmas cards to which a number of charities can contribute, in order to get one delivery?

Sir K. Joseph

My hon. Friend says that some business men may think that the Government have not gone far enough, but the main theme of my statement is that we are taking power to consider performance at any time and to remove the monopoly to the extent justified. The precise arrangements for charities will have to be defined, but I should have thought that my hon. Friend's suggestion would be a reasonable part of them.

Mr. W. Benyon

Is not the real need for massive Post Office investment in mechanisation, of one form or another? Is my right hon. Friend aware that some of us, particularly myself, cannot see how that can be done outside the monopoly?

Sir K. Joseph

It may be that further mechanisation is part of the right answer, but that is a matter for management.

Mr. Cryer

Is this not the beginning of a vortex of destruction of the Post Office? Does not the right hon. Gentleman's statement mean that rural areas will suffer, that users who benefit from the Post Office monopoly will face increased charges, and that the Secretary of State will then use his powers, which will result in a further increase in charges, a further reduction in services and a further invocation of his powers? Is this not the basis for what he hopes will be the total destruction of the Post Office, and will he be surprised if the Union of Communications Workers bitterly opposes the proposal?

Sir K. Joseph

The hon. Gentleman debases language by such rhetoric which bears no relation to the statement that I made.

Dr. Mawhinney

Will any private carriers be required to compete with the Post Office on a national basis, or will they be allowed to compete locally? If the latter, does not that raise the possibility of decreased services, particularly in rural areas?

Sir K. Joseph

No private carrier will be required to do anything. To the extent that a monopoly is, under the circumstances described, withdrawn locally or nationally, it will be up to the private sector to respond in any way it decides fit.

Several Hon. Members


Mr. Speaker

If hon. Members will be brief, I hope to call those who have been rising throughout.

Mr. John Home Robertson

As the Secretary of State cannot explain his ideas, will he at least explain his arithmetic? Precisely how will the Post Office charge my constituents in rural Scotland for the services they now receive, if the profitable parts of the Post Office are hived off as the right hon. Gentleman suggests? What exactly will they be charged for the service, or will the service be reduced—and, if so, how?

Sir K. Joseph

The hon. Gentleman cannot have followed what I said. His constituents will find no alteration whatsoever, unless they decide to make use voluntarily of the express service, at over £1, or the business document exchange, or decide to benefit from the freedom of charities to deliver Christmas cards. There will be no other change for them.

Mr. Adley

With regard to Christmas cards, will my right hon. Friend explain how those responsible are to know what is inside the envelopes? How will they know whether they really are Christmas cards? Who will do the checking, and how are they to know whether the cards come from a charity?

Sir K. Joseph

There are already privileges for lower-cost mail given by the Post Office. No doubt those privileges are sometimes abused. It is up to the Post Office to prosecute if it thinks fit.

Mr. Hugh D. Brown

Does the Secretary of State realise that this latest ideological obsession does nothing to solve the difficulties facing the Post Office, which are not seen by the public as a real problem, like unemployment, for example? It will be bitterly resented by the public, the workers and everyone on the Opposition Benches.

Sir K. Joseph

I do not think that the hon. Gentleman speaks for the public when he says that. To the extent that this reminder to the postal service that its monopoly is a privilege, and not a right, achieves a higer standard of service to the public, I think it will be welcomed.

Mr. Renton

Having taken this important first step in regard to the postal services, will my right hon. Friend now turn his attention to the inefficient and costly monopoly in the telephone services? Does he accept that if private capital and management were introduced into the telephone services that would lead to higher capital expenditure, more rapid introduction of advanced technology, and therefore a much better service to the customer?

Sir K. Joseph

The Government propose to announce their policy on the telecommunications service before the recess.

Mr. McQuarrie

Despite what has been said by Opposition hon. Members, I agree with what my right hon. Friend said today about the proposed operations by private operators. In the rural and coastal areas that will give an opportunity to entrepenuers and small businesses to create something, because there is a demand for that kind of service in those areas. In my constituency urgent mail has to travel 35 miles in both directions with the hope of its being received back into the same area within three or four days, instead of having a one-day service.

Sir K. Joseph

My hon. Friend is going a bit fast. There is no proposal to remove the monopoly in any area at present; there is simply a proposal to take powers to be able to remove it if in any area the performance falls below a specified standard.

Mr. Maclennan

Will the Secretary of State withdraw his accusation that Opposition hon. Members are not concerned about what is in the consumers' interest and recognise that he has not acted in accordance with the advice given by those who represent the consumers' interest—the Monopolies and Mergers Commission and the Post Office Users National Council? Why has the right hon. Gentleman felt it necessary to take the steps that he has announced in advance of the Post Office response to the Monopolies and Mergers Commission's recommendations, which he omitted in his initial statement? Will he recognise that our concern about the consumers' interest is, as he has failed to recognise, that any diminution in the Post Office's profitability is bound to put pressure on the less profitable services, particularly those that serve the rural communities, which can never be subject to commercial considerations?

Sir K. Joseph

I think that when he studies what I have said the hon. Gentleman will find that it is a balanced statement, which takes into account the interests of those who work in the postal service and of the postal service, and certainly of the rural areas. I stand by my charge that the Opposition seem to show scant interest in the consumer. The right hon. Member for Deptford (Mr. Silkin), who led for the Opposition, referred to the Monopolies and Mergers Commission but never specifically referred to the particular interest that led to the whole statement—namely, that of the consumers.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) asked why I did not take more heed of the commission's report. I did take heed of it, but the hon. Gentleman must remember that the report was only on the inner London postal service, and my statement was about the national postal service.

Several Hon. Members rose

Mr. Speaker

I shall call the Opposition Front Bench spokesman again, but I undertake to call afterwards not speakers from the Front Bench but the hon. Members who have been rising.

Mr. John Silkin

I should like to put two points, briefly. First, it was the Labour Government who appointed consumer representatives in the first place. Secondly, I referred the right hon. Gentleman, who clearly does not have a copy with him, to the Monopolies and Mergers Commission report, paragraph 12.2 and 12.3, where he will find a strong reference to the Post Office users and the consumers. Perhaps it would have saved time if the right hon. Gentleman had read it originally.

Sir K. Joseph

The right hon. Gentleman cannot create an alibi. He never once referred to the consumers, the public.

Mr. Michael Brown

I congratulate my right hon. Friend on his statement. Can he confirm that under present circumstances the preservation of the Post Office would in no way guarantee the continuation of the Post Office services in rural areas? Will he specify the criteria that he will apply in determining whether the Post Office is living up to his expectations?

Sir K. Joseph

What matters is the service in urban and rural areas alike. The purpose of my statement is to seek to improve those services.

Mr. Winnick

Leaving aside the genuine charities, may I ask whether the right hon. Gentleman is aware that there will be no confidence in a few pirates or spivs taking on the duties and responsibilities now being properly carried out by the Post Office? Is it not clear that his statement shows once again his malice and certainly hostility towards, and the vendetta that he is waging against, the public sector?

Sir K. Joseph

No individual will be forced to use a charity for Christmas cards. The Post Office will still handle charity Christmas cards, but the consumer will have the option of using charitable services if they are available and if he or she wishes.

Mr. Henderson

Does my right hon. Friend agree that an essential element in the justification of the Post Office monopoly is that, broadly speaking, equal ser vices at an equal price will be provided throughout the country? Is he aware that while his statement will be broadly welcomed on the Government Benches, the legislation that will follow will be more carefully studied by Conservative Members than by any other hon. Members, to ensure that it will not adversely affect rural constituencies?

Sir K. Joseph

I accept what my hon. Friend says, but I assure him that what I have announced will do nothing whatsoever to injure rural services.

Mr. Lyell

Is my right hon. Friend aware that the business community, which already resorts privately to expensive methods of its own, will greatly welcome the opportunity of the new, swifter and more flexible services that his proposals provide, and that it is illogical for the Opposition spokesman, the right hon. Member for Deptford (Mr. Silkin), to suggest that the fact that some other countries subsidise parts of their rural services gives any reason for depriving the community in this country of the beneficial measures that my right hon. Friend has announced this afternoon?

Sir K. Joseph

I agree with my hon. Friend on both points.