Post Office (Hansard, 21 April 1993)

§ 2. Mr. Cummings
To ask the President of the Board of Trade what has been the contribution of Post Office services to Government revenues since 1979.

§ The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine)
The cumulative total of the Post Office's external financing limit contributions from 1979–80 to 1991–92 is £802 million.

§ Mr. Cummings
Now that the Secretary of State has admitted that the Post Office made £800 million, will he agree that we have the best Post Office in Europe, with the most efficient work force? The Post Office, which has increased profits by over 50 per cent., is a huge public sector success and should remain so. When will he present to the House his most extensive and far-reaching review?

§ Mr. Heseltine
I am sorry that the hon. Member is still indulging in the language of the past. The moment that a company indicates a success by making a profit, somehow it is seen to be milking the customer. It is important that companies should earn sufficient surplus to pay for their investment programmes and to earn a reasonable return on capital, which is what the Post Office is doing.

§ Mr. David Nicholson
My right hon. Friend will have recalled, when he gave the information in his original reply, the value of the dictum that when an institution is in good working order it is a good idea not to mess about with it. Will he therefore give all the support that he can to the management of the Post Office so that it can continue to give an excellent service to consumers, whether in rural or urban areas? In particular, where a post office changes from Crown status to agency status, as is proposed for Wellington in my constituency, will he ensure that that post office continues to retain a central position and to provide high standards of service?

§ Mr. Heseltine
My hon. Friend is right to seek an assurance that we are committed to enabling the Post Office to provide a high standard of service. That is why we have made it absolutely clear that the universality of service and of charge is not negotiable in any of the options that we are considering. However, I cannot ignore the fact 305 that company after company that has moved from the public to the private sector has been able to achieve significant improvements in productivity, has played a role in the international market and has earned greater returns for this country than ever it was able to do in the public sector.

§ Mr. Robin Cook
May I invite the President of the Board of Trade to correct a misunderstanding that he appears to have of my hon. Friend's question? My hon. Friend put it to him that the Post Office is one of the most profitable in the world, that it has the most reliable delivery service, at one of the cheapest prices, in Europe, and that in Britain it has achieved a growth in productivity that is double the average for the services sector over the past decade. My hon. Friend's question to the President was, why put all that at risk by privatising the Post Office, because of this Government's obsession with selling anything that they can sell off? Since the President has apparently announced that he cannot do it for another year, because he cannot figure out a way to do it, would not it be much better to end the damaging uncertainty, the delay in investment and the anxiety of staff by announcing that he intends to drop the whole idea and accept that the Post Office is a public service which should belong in the public sector?

§ Mr. Heseltine
That is the language with which the Labour party has sought to attack every change that this party has made over the past 10 years. It is because we have faced the Labour party down time and again that British Gas, the power companies and the water companies are winning in the world marketplace. Every time that we take a difficult decision on behalf of British industry, it is resisted by the Labour party. That is a very good reason why we should stay in power and have the courage to go on doing so.

§ Mr. Cormack
Does my right hon. Friend accept that many of us, who have strongly supported privatisation, still have reservations about privatising the royal mail? Does he accept that the figures that he gave to the House this afternoon illustrate a very good case for removing economic restraint on the Post Office, but not a very strong case for privatising it?

§ Mr. Heseltine
My hon. Friend is right to express concern, but what I have to make clear to the House is that the overwhelming majority of post offices are already in the private sector. My hon. Friend will also realise that within the public sector there are unavoidable public accounting disciplines which constrain the ability of a public sector organisation to compete effectively with the private sector. What is happening in the Post Office is that increasingly a sector of its market is being eaten into by private sector companies and by new technology, whether it is the fax machine, or the bike or the courier. All these things are putting the Post Office under competitive pressure. That is why many people think that we can preserve the standards of the royal mail but widen the opportunities for the people who work in it.

§ Mr. Hain
I remind the President of the Board of Trade that, unlike the other utility services that have been privatised, the Post Office's costs are 80 per cent. labour intensive and there is no way in which he can guarantee to rural and outlying areas the quality of service that they enjoy at present. May I also remind him, that on top of the 306 £800 million that has been contributed, through negative external financing limit payments, to the Treasury coffers, the Treasury has received an additional £400 million in corporation tax over this period. By privatising the Post Office, the President will perhaps reap a one-off return of an equivalent scale, but he will forgo year upon year of income to the Treasury from a service which the public respects and is the best in the world.

§ Mr. Heseltine
I am the first to recognise the quality of the service, but the question that I have to answer is how can we enable the Post Office to build on the quality of its service and widen the opportunities for Britain in so doing? The issue is whether there would be an opportunity for the Post Office in a private sector context in an international competitive world, which would be bigger than that in which it can involve itself today.

§ 3. Mr. John Marshall
To ask the President of the Board of Trade if he will make a statement about the future of the Post Office.

§ Mr. Heseltine
No decisions have yet been taken on the future organisation and structure of the Post Office. I will make an announcement to the House when we have reached conclusions.

§ Mr. Marshall
Does my right hon. Friend accept that the fears expressed about the consequences of privatising the Post Office are precisely the same as those expressed about the privatisation of British Telecom? Does he agree that the current uncertainty is bad for the staff, customers and management of the Post Office? Will he bring it to an end speedily by announcing the imminent privatisation of the Post Office?

§ Mr. Heseltine
My hon. Friend is right to make the point that the Labour party has opposed every liberalisation and every measure to free the public sector which we have introduced and would therefore have prevented the large number of the advances now being achieved by the privatised companies. [HON. MEMBERS: "Jobs for the boys."] Opposition Members talk about jobs for the boys. I am glad that they recognise that we are concerned to protect the jobs of people in the privatised industries by setting them free to take advantage of the new, worldwide marketplace. I cannot today give my hon. Friend the assurance that he requests, although I am the first to recognise that many people in the Post Office are asking for exactly what he suggests.

§ Mr. Simon Hughes
Does not the Secretary of State realise that there is all the difference in the world between releasing a nationalised public sector industry from the constraints traditionally imposed on it and guarding the unity and coherence of a service in the national interest? I thought that his political experience would have taught him that there is all the difference in the world between popular capitalism and unpopular dogmatism. Does not he realise that privatising the Post Office would be a privatisation too far?

§ Mr. Heseltine
That was a classic example of the Liberal party trying to have it both ways. The hon. Gentleman must make his own decision about whether it is a journey too far, but we shall decide whether we are going to embark on the journey.

§ Sir Michael Grylls
Does my right hon. Friend accept that there cannot be an organisation in the world, however good, that cannot be improved and that that must apply to the Post Office and the delivery of the mail and parcels? Will he press ahead with his plans for the privatisation of the Post Office and to increase competition because that will also improve the service to consumers?

§ Mr. Heseltine
My hon. Friend is right to ask about competition. I have tried to say how technology and the globalisation of markets are already subjecting the Post Office to a range of new services. However, the critical question at the heart of the matters is how, while protecting the absolute non-negotiability of the universality of the service and the price, we can allow the men and women who work in the Post Office to expand, to compete and to seek wider opportunities, which is not compatible with public sector discipline. That is the dilemma we face.

§ Mr. Cousins
Does the President accept that, on the matter of Post Office privatisation, his figleaf is becoming dangerously small? After nearly nine months and the expenditure of £500,000 on advice from Kleinwort Benson, he has no proposals to put before the House. The Post Office awaits its opportunity as a public sector company which can mop up the postal markets of western Europe. When will he allow the Post Office the commercial freedom to be that kind of public sector success?

§ Mr. Heseltine
The hon. Gentleman is completely divorced from the reality of public sector accounting. No Government have ever been able to set free a public sector enterprise outside the disciplines of the public expenditure round and Treasury control. There never has been nor ever will be such a Government. [HON. MEMBERS: "Why not?"] Because the Labour Government designed a structure that was not compatible with a free enterprise system. If there had been such a system, the Opposition would presumably have found it in the years when they experimented so disastrously with public ownership.