Post Office

HC Deb 12 July 1994 vol 246 cc835-934

Madam Speaker

I have selected the amendment in the name of the Prime Minister.

3.50 pm

Mr. Robin Cook (Livingston)

I beg to move, That this House rejects the options in the Government's Green Paper 'The Future of Postal Services' for whole privatisation or part privatisation of Royal Mail and Parcelforce; records its concern that in order to achieve these options Her Majesty's Government proposes to break up the Post Office, putting at risk the close co-operation and mutual support of Royal Mail, Parcelforce and Post Office Counters; recognises the vital role of post office branches within their local communities and is concerned that the survival of branches in small communities with low turnover will be threatened by the break-up of the Post Office; believes that the best way to safeguard the continued provision of universal access and uniform affordable pricing by Royal Mail is to keep it in public ownership as a public service; congratulates the Post Office on its efficiency while a public corporation in providing the most reliable mail service in Europe at one of the cheapest prices without calling on any public subsidy; is of the view that the future of the Post Office and of its service to its customers can best be secured by providing it with commercial freedom as a single corporation within public ownership; and calls upon the Government to adopt that option. The Opposition thought it would be desirable that the House should have an opportunity to debate the Government's Green Paper on the Post Office before the Government produce their response to the consultation on that paper. Had the Opposition not initiated this debate, the House would not have had an opportunity to debate the Green Paper before the President made up his mind on it.

As it is, we are holding a debate without the President. He is missing, just as he missed the last DTI questions—when I was informed, with remarkable appropriateness, that he was attending an invisible seminar. Today I am informed that he is in Cape Town, so instead we have with us the Minister of State.

The Government's reluctance to debate these proposals brings me to my first question for the Minister of State. As the Green Paper was not thought of sufficient constitutional importance to justify a statement to the House when it was published, and as the views of the House do not merit a debate in Government time, may we at least have an assurance that the outcome of the Green Paper will be first announced to Parliament?

I ask because I notice that the consultation period ends on 30 September. In view of the timing, may we have an assurance that the House will be the first to hear of the result, and that we will not first learn about it at the Tory party conference in October—not that we would want, or be allowed, to get in there, and I am sure that no Conservative Member with doubts will be called to air them there?

I repeat: can we have an assurance that the fate of the Post Office will first be announced in this Chamber and not in Bournemouth? I notice that the Minister is not leaping to his feet to provide us with that assurance. I appreciate that he does not have much discretion in the matter, but perhaps, before he comes to reply, he will set the telex wires between here and Cape Town humming so that, when he rises, he will be able to give us the assurance.

While the Minister is thinking about that, may I try another question on him? I notice that the Government amendment welcomes the opportunity of consultation on the range of options in the Green Paper. I must therefore ask the Minister the question that the Under-Secretary appeared to have so much difficulty with a fortnight ago. How real will the consultation be? Are the Government prepared to listen to the views expressed during it?

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

No.

Mr. Cook

My hon. Friend supplies us with a candid answer, of a kind with which we may not be favoured when the Minister replies; but she voices my own suspicions.

If the consultation shows that the great majority of the British public do not want their Post Office privatised, will the Government accept that verdict?

Mrs. Dunwoody

Give way to the Minister.

Mr. Cook

I thought for a moment that my hon. Friend was again going to anticipate the answer. If so, I suspect that she would again have been correct.

The Minister owes it to the House to answer the question, and he owes it to the public to listen to what they want done with their Post Office. I say that because the Government have no mandate to privatise it. There was not a word about privatisation of the Post Office in their manifesto. It included a passage about the Post Office, but it gave no hint of privatisation. One can try sprinkling water on it, but the wording still does not appear. I have found no word of privatisation in any election statement of the Government in the most recent general election campaign.

The only reference to the privatisation of the Post Office that I have been able to find in any general election campaign was the ruling out of privatisation of the Post Office by the noble Lady Baroness Thatcher, in the 1997 general election, the week before polling day. She said: I have indicated that the Royal Mail would not be privatised. People feel very strongly about it and so do I. The Royal Mail, in her words, would remain inviolate. I cheerfully concede to the Minister that that was 1987. It was an assurance that apparently joined the list of invisibles in 1992, but no one in 1992 told us that the Post Office was now ready to be privatised or violated.

I will happily give way to any Tory MP who can produce his election address from 1992 in which he told his electorate that he thought that privatisation of the Post Office would be a terrific idea. I shall not be surprised if there are none of them. It is very wise of them, too, because the most recent opinion poll, in June, showed that 71 per cent. of the public opposed privatisation. The numbers of people opposed to privatisation have actually increased since the word got out that the Government were thinking of privatising the Post Office.

Mr. Peter Ainsworth (Surrey, East)

Will the hon. Gentleman give way?

Mr. Cook

Yes, and I shall look forward to reading the hon. Gentleman's election address in the Library tomorrow.

Mr. Ainsworth

The hon. Gentleman may recall that the Conservative manifesto in 1992 included a commitment to maintain an affordable and uniform pricing structure, a commitment to a national delivery service and a commitment to maintain a large network of post offices. Did the Labour party's manifesto contain those commitments or not?

Mr. Cook

Of course, those issues become matters of question only when the Government proceed to privatise the Post Office. There is no suggestion in our minds that we would seek to privatise the Post Office or put at risk the uniform postage, the chain of local branches or the right of any customer of the Post Office to post a letter from any address in Britain to any other address in Britain at the same low price.

Those things are put at risk only because the Government are now seeking to privatise the Post Office. That is why they have to give the assurances—why give an assurance when those things are not at risk?

Several hon. Members

rose—

Mr. Cook

I give way to seniority.

Mr. Ian Taylor (Esher)

The burden weighs heavily on me, but will the hon. Gentleman consider that the Select Committee and all the people involved in the Post Office have recognised that time has passed? It is not a question of what we promised years ago. The fact is that—

Mr. Cook

indicated dissent.

Mr. Taylor

No. The fact is that there is a commercial threat to the viability of the service if the status quo is preserved. What is the proposal of the hon. Gentleman to ensure that we have a uniform national Post Office that is excellent in its delivery of service, and which gets access to capital—which it will not if it stays entirely in the public sector?

Mr. Cook

No one is defending the status quo; nor was the Select Committee. The hon. Gentleman is absolutely right in that: no one wants the status quo. Everyone wants to find a formula that would provide a stable consensus solution for the Post Office. As the hon. Gentleman asked, we produced 13 pages in our plans for a modern Post Office, in which we went for the option of commercial freedom in the public sector. Later, I shall spell out exactly what that means and how it can be delivered, and how even the current Government believe, in another context, that that can be delivered.

Mr. Anthony Coombs (Wyre Forest)

rose—

Mr. Cook

No; I must carry on.

I invite the hon. Gentleman to consider this. Although I referred earlier to the opinion polls which showed that 71 per cent. of the general public opposed privatisation, I must warn the hon. Gentleman and his colleagues that 56 per cent. even of those people who last month owned up to voting Tory opposed privatisation of the Post Office. The people who voted Tory last month in the European elections are the bottom bedrock of the Tory vote. Not even a majority of the last 27 per cent. who turned out to vote Tory would vote for privatisation of the Post Office.

Mr. Michael Bates (Langbaurgh)

Will the hon. Gentleman give way on that?

Mr. Cook

I shall give way in a second.

The reason why those people will not buy privatisation of the Post Office is straightforward: they have more common sense than the dogmatists and ideologues who now rule over them.

Mr. Bates

During that poll, were people asked whether they would be in favour of renationalising British Telecom? Is that still Opposition policy?

Mr. Cook

That has not been the policy of the Labour party since 1987, and there is no great secret about that. If the hon. Gentleman would read our manifesto with the same care that we read the Conservative manifesto, he would know that.

I should like to return to the question why the public have more sense than to swallow the proposal in the Green Paper. It is because they have more sense than to believe that the Post Office would work better if it was broken up, which is what the Green Paper proposes.

Mr. Anthony Coombs

rose—

Mr. Cook

Perhaps the hon. Gentleman will allow me to make my speech rather than carry on a dialogue. I am sure that I can find an opportunity later to let him intervene.

To privatise the Post Office, the Government first have to carve it up. Their only reason for proposing to separate Royal Mail from Post Office Counters and put them under separate ownership is so that they can privatise the Royal Mail, which is the profitable part. If privatisation was not on the agenda, no one in his right mind would propose to divide the Post Office and place the parts under separate ownership.

As the Minister knows, the Government held a two-year review, during which they invited views on the future of the Post Office. Not one of the published submissions suggested that it would be a good idea to break it into two separately owned companies.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

Will the hon. Gentleman give way?

Mr. Cook

Perhaps I may be allowed to finish this point. After that, I owe it to the hon. Member for Wyre Forest (Mr. Coombs) to give way.

We are repeatedly told that it is important to privatise the Post Office and to move it with the times, so that it can meet the challenge of the international market and beat off the Dutch raiders. Not one post office in the world has split its counter service from its delivery service, and the Dutch post office, which is held up to us as the threat to our postal services, has not only kept them integrated but said last month that separating counters from delivery would hamper their management.

Mr. Anthony Coombs

The vast majority of people would agree that the dogmatism and lack of common sense are entirely on the hon. Gentleman's part. Is he not peddling the sort of scare stories that we heard in 1983 when British Telecom was being privatised? But since then the cost of telephone calls has fallen by 30 per cent., there is more investment and the privatised BT is providing a better service for the customer than ever before.

Mr. Cook

I am astonished that, in the week in which the National Consumer Council produced a blistering report on how water charges have increased by three quarters since privatisation, hon. Members have the nerve to claim that privatisation has been the source of lower prices. The hon. Gentleman should try telling that to the consumers of South West Water, who have seen prices double.

If the hon. Gentleman wants to take his stand on prices, let us argue prices. During the period since British Telecom was privatised, postage prices have gone up by less than the rate of inflation. BT prices overall have dropped by over 12 per cent. compared with inflation, and the price of the postage stamp compared with inflation has gone down by 2 per cent. The percentages would have precisely matched those of BT if the Treasury had not perpetually insisted on increasing payments to the Treasury. That forced the last increase in the price of postage stamps.

Mr. Malcolm Bruce (Gordon)

The hon. Gentleman spoke about the Dutch example. Does he agree that the competition about which the Government complain from the Dutch post office comes from an organisation that has exactly the degree of commercial freedom that the Government say is unacceptable here? It has enabled the Dutch to compete with our Post Office. Why cannot we have the same kind of operation here?

Mr. Cook

The hon. Gentleman anticipates a matter to which I shall turn. The exact model that we are invited to be threatened by, and because of which the Post Office should be privatised, is a model of commercial freedom in the commercial sector.

I was speaking about the division that is proposed in the Green Paper between the Royal Mail and Post Office Counters. That division will leave them no longer accountable to one board and under one owner. Accountability to one board has been important in the history of those two distinct businesses, because it makes sure that they pull together. The danger under separate owners who are no longer accountable to the same board is that they would pull against each other.

I shall give an example. The Royal Mail has now established callers' offices at more than 3,000 Royal Mail sorting offices to provide a limited service direct to business clients. The service is kept limited because, while there is common ownership with Post Office Counters, the Post Office board rightly recognises that that service would provide direct competition to Post Office Counters.

Once the Royal Mail is a separate company with private owners, there is nothing to hold it back from marketing those callers' offices, providing the full range of Royal Mail services. It will be under pressure from its private owners to do so, because the one advantage of breaking Royal Mail away from Post Office Counters is that it could open its own outlets and bypass post office branches.

Those callers' offices are all in delivery offices. By definition, they all have large car parking spaces. It would be easy to market them to businesses as the Royal Mail equivalent of the out-of-town Sainsburys. That would do to high street post offices what Sainsburys superstores have done to village shopping.

That brings me to the confidence trick at the heart of the Green Paper. It contains many assurances, and I am willing to accept one of them in full. I unreservedly accept the assurance on page 22 that children will still be free to write to Santa Claus after privatisation. It is good to know that the Government retain a human and delightful touch. It is also good to know that Santa Claus remains inviolate, at least until the next election.

However, we really have to believe in Santa Claus to believe the financial arithmetic of the other assurances. The big con trick practised in the Green Paper is that, by keeping Post Office Counters in the public sector, we will keep open the network of post office branches.

They will stay open only if the Royal Mail keeps up its payments. Currently, it pays £250 million a year for the handling of its services by Post Office Counters. That payment is related to the volume of its business so handled. Suppose the Royal Mail seizes its freedom to handle more of its own business in the way that I have described—how much will it be willing to pay Post Office Counters then? If its volume goes down, how much will its payment go down?

There is not much of a margin in the books for a reduction. Post Office Counters made a profit of only £25 million last year. It would take only a 10 per cent. drop in its business from Royal Mail for it to end up making a loss. What would happen then? It would have to make cuts. Where would those cuts fall? We can all predict that. The point that should worry Tory Back Benchers is the fact that it is the small village sub-post offices that get the vast cross-subsidy from the Crown post office.

Mr. Gyles Brandreth (City of Chester)

Will the hon. Gentleman give way?

Mr. Cook

As the hon. Gentleman is no doubt worried about his village post office, I shall give way to him.

Mr. Brandreth

Of course I am concerned about the future of my village post offices.

Is not the hon. Gentleman indulging in exactly the same scaremongering tactics that the Opposition indulged in a decade ago, when they told us that a privatised British Telecom would result in vastly increased charges and the ending of rural services and rural telephone provision? In fact, the number of telephones in the rural communities that work has increased. The hon. Gentleman is simply repeating scaremongering tactics. Why should we believe him now, when what his colleagues were saying 10 years ago has been shown to be untrue?

Mr. Cook

The hon. Gentleman should be quiet and listen, because he obviously needs to do so. If he and his hon. Friends have not grasped one fact, the future of rural post offices is in deep trouble.

That fact is that the difference between telecommunications and the postal services is that, with new technology, it is now a matter of indifference how far a telephone call is going, but with the postal service the cost of delivering a letter is directly proportionate to the distance that it travels. That is why privatisation of the Royal Mail raises the problem of protecting rural post offices and remote deliveries.

Mr. Clifton-Brown

Will the hon. Gentleman give way?

Mr. Cook

I want to continue with the argument. If Conservative Members are really interested in village post offices, they had better listen to it.

If the payment to Post Office Counters goes down, and if the Crown post office is unable to maintain the cross-subsidy, how long will it be before we begin to see a retreat from the post office network?

How many post office branches would close if the cross-subsidy between Crown and village post offices were cut? I accept that rural areas which the hon. Member for City of Chester (Mr. Brandreth) claims to represent are increasingly represented by Labour MEPs in Strasbourg, but they are still represented by Tory Members of Parliament, who may well go the way of their local Tory MEPs and disappear if privatisation results in the closure of their village shops.

Hon. Members should not think that the regulator will help if that problem arises. In the Green Paper, the regulator is the regulator of the Royal Mail, not Post Office Counters. In the Green Paper, the role of the regulator has been carefully structured so that, on the most contentious issue—the closure of a rural post office branch—the regulator will have no role.

In any case, the real job of the regulator—as with so many of the regulators appointed by the Government when they privatise utilities—has nothing do with protecting services and everything to do with promoting the interests of competitors and reducing the market share of the utility.

Lady Olga Maitland (Sutton and Cheam)

We have been hearing constant jeering about the Government's plans for the Royal Mail, but will the hon. Gentleman not tell us what his policies would be for the Royal Mail? Would he invest in it? If so, is this a spending pledge, and would he sustain it?

Mr. Cook

I do not know whether the hon. Lady was here when I answered precisely that question. I gather that she was not here, so I should stress that it is a waste of the House's time if hon. Members feel free to intervene without having listened to a speech.

The hon. Lady asked about investment. The Post Office would have no problem meeting its investment plans if the Treasury were not constantly increasing the amount of money that the Post Office has to hand over; it has trebled over the past three years.

There is a paradox before the House. We are invited by the Green Paper to believe that, in the public sector, the Post Office faces slow decline, but the public expenditure White Papers say that the Treasury expects rising profitability in the public sector. That is why the Post Office cannot invest.

The hon. Lady asked about the spending commitment. If the Treasury did not demand so much in profits from the Post Office, there would be no need for any spending commitment. [Interruption.] No, there would not. That money would provide the investment.

Mr. Clifton-Brown

Will the hon. Gentleman give way?

Mr. Cook

No. I said on the last occasion that I would not give way again.

The Green Paper opens up the Post Office to competition; it opens up every part of the operation of the Royal Mail except the last bit, where the letters are pushed through the letter boxes. It is understandable that the Green Paper does not propose to open that up to competition. Door-to-door delivery is the labour-intensive part of the operation. It is high in costs, and it is impossible to find anybody who wants to take it over, but it is the only part of the monopoly that will be left.

Under the Green Paper, Royal Mail will be forced to accept competitors collecting bulk mail from big clients, sorting it out in their own mail rooms, transporting it to the city of destination and then dumping it at the Royal Mail delivery office for the postman to cart round the streets.

It will not save the Royal Mail much in costs. Even if the competition cuts out all the large clients who are easy to handle at a profit, the Royal Mail will still be obliged to collect from every collection box, run vans between every town and maintain all 80 mechanised sorting offices round Britain. The fixed costs of its network will not decrease in step with the volume that is passing through it, but the revenue will fall with that volume.

The problem for the public is that, as the competitors skim away the profitable parts of its operation, Royal Mail will not have the same profits to cross-subsidise the domestic customer who wants to post a single letter—particularly the expensive domestic customer who wants to send it a long way.

I refer to it as a problem. I am not sure that everyone sees it as a problem. In the early 1980s, one Tory MP advocated that we should have a Royal Mail in which people paid for the distance they wanted their letters to go. As he rather cheerfully argued, There does not seem to be a case for massive subsidisation of all those living in the outer Hebrides who also choose to have all their friends in London. The introduction of distance pricing for the mail service could be crude but still effective. Just how crude can be seen from the estimated cost of sending a letter from the Hebrides to London, which would produce a distance pricing of £10. Certainly crude, and only effective in relieving the Post Office of any need to provide the service.

Dr. Keith Hampson (Leeds, North-West)

Scaremongering.

Mr. Cook

The hon. Gentleman accuses me of scaremongering, but the Member of Parliament that I quoted was no ordinary Tory. He is now a Cabinet Minister—the Secretary of State for Wales. The hon. Gentleman can shake his head as much as he likes, but that was said by the Secretary of State for Wales. My Welsh colleagues may also shake their heads in disbelief, but he is unfortunately still the Secretary of State for Wales. He may not have stayed overnight in Wales, but every week he sits in the Cabinet that will decide the response to the Green Paper and that invites us to believe their assurances that a uniform, affordable tariff will remain.

Mr. Stuart Randall (Kingston upon Hull, West)

I am worried by my hon. Friend's remarks about possible charging. What would happen at Christmas? Would the poor and pensioners no longer be able to send Christmas cards?

Mr. Cook

I will answer my hon. Friend by considering the one example in the world of a country that has opened up its postal services to outside competition in the way that the Green Paper envisages for the Royal Mail after privatisation. Since New Zealand liberalised its postal services, the average postal charge has increased 50 per cent. to compensate for the loss of profitable business. Tory Members might like to note that rural residents in New Zealand pay an annual fee of 80 dollars if they want their mail delivered to their door.

One hundred and fifty years of public ownership has given Britain one of the best postal services in the world. It has more deliveries than, for example, the Dutch postal service can manage. There is no second delivery or Saturday delivery in Holland. London enjoys 11 deliveries a week, but Amsterdam has only five. Anyone who reads the Green Paper's tepid paragraph on second delivery will know that there is no assurance that delivery will join Santa Claus in surviving privatisation.

The UK postal service is also cheaper. Since the mid-1980s, its charges have fallen against inflation, and they are now one fifth lower than those of the Dutch postal service. The Post Office has also made bigger productivity gains. Since the mid-1980s, it has achieved higher productivity while in public ownership than gas or electricity under privatisation.

I grant that the Post Office is not top of the table. If one considers all the energy and utility industries, whether public or private, top of the table for productivity is British Coal—not that it receives any reward from the Government. The Post Office comes in higher than many industries that the Government have already privatised.

Mrs. Dunwoody

What is happening already in rural areas is bad enough. Not only are small country towns losing Crown post offices, but many rural post offices are under such pressure that they too will soon lose their trade.

Mr. Cook

My hon. Friend emphasises that many Members of Parliament on this side of the House represent rural areas, and understand perfectly well the anxieties felt by people living in them. They know precisely why strong public opinion is registered against privatisation.

Ours is also the only postal organisation in the world that makes a profit on its mail services.

Mr. Clifton-Brown

I have listened carefully to the hon. Gentleman's arguments against privatisation, and I am particularly concerned, as is the hon. Gentleman, about rural offices. Does he realise that 19,000 out of 20,000 offices are currently in private ownership? As he is so keen to reverse privatisation of the Post Office, will he pledge here and now that his Government will find the funds to renationalise the Post Office if we privatise it?

Mr. Cook

I have already answered that question. If the Government are daft enough to proceed with privatising the Royal Mail, we will look at ways of restoring it to where we believe it belongs—in public control, where the bulk of its customers want it kept.

As for the 19,000 sub-post offices in private ownership, it is perfectly correct that they have private sub-postmasters. Those people are working to a contract with Post Office Counters, and the money they receive under the contract depends critically upon the money that Post Office Counters receives from Royal Mail.

If the hon. Gentleman is really concerned about the future of his village post office, he should ask himself whether it makes sense to do as the Government propose and to break Post Office Counters, a company making a £25 million profit, away from Royal Mail, a company making a £280 million profit. If I, as a constituency Member for that village, were interested in the hon. Gentleman's village post office, I should seriously doubt the wisdom of that separation of Post Office Counters from its major source of revenue.

As I was saying, we have the only Post Office in the world that makes a profit. It gets not one penny in subsidy. On the contrary, it subsidises the Treasury with the profits that it hands over—and those demands have trebled over the past three years. This year, the Post Office will pay the Treasury £230 million—almost as much as Post Office Counters receives from Royal Mail for handling charges and for keeping open the entire post office network throughout Britain.

Of course, the reason why that sum is demanded from the Post Office has nothing to do with an estimate of its profitability and everything to do with the Treasury's calculation of what it desperately needs. That is the real reason why the "For Sale" sign is going up outside the Post Office: the Treasury needs the money. After 150 years of public stewardship of the Royal Mail, the threat is that it will be brought to an end to pay for 15 years of economic incompetence by the Government.

The Post Office need not be privatised. There is an alternative. Let me answer the hon. Members who have asked about it. There is an alternative that would provide the commercial freedom that the Post Office needs to meet the new competition while keeping it together and keeping it in the public sector. The Post Office would have the commercial freedom to allow it to expand its commercial activities, to form joint ventures with private sector companies, to raise capital for investment from private sources, and to compete in the new global communications markets.

It is true that commercial freedom in the public sector is included as an option in the Green Paper—I hope to hear something from the Minister about that. However, I have never read any Green Paper with so little faith in one of the options that it lays before us. Indeed, even before the rest of us can express a view, the Green Paper tells us that the Government have concluded that that option will not work.

It is not entirely clear why Ministers have come to that conclusion. I was perplexed by the reasoning used by the Under-Secretary of State for Technology on the "Today" programme last week, when he said that the Post Office could not have commercial freedom in the public sector because there is always the knowledge that so long as it remains in the public sector then it can't go bankrupt". That seems to me a good reason for keeping it in the public sector. The idea of the freedom to go bankrupt seems an excellent argument against privatisation.

The Green Paper that the Minister was discussing says that public ownership would condemn the Post Office to "slow decline". That is an appalling admission. Ministers are effectively saying that, if they remain responsible for the Post Office, the best they can offer it is slow decline. If that is true, it is an argument not for taking the Post Office out of the public sector, but for putting that lot out of government, so that they are no longer responsible for the public sector.

The Minister is now in a difficult position, because last week his argument that there cannot be commercial freedom in the public sector was demolished from the Government Dispatch Box, when the White Paper on the BBC was introduced. That offered the BBC commercial freedom within the public sector—the freedom to expand its commercial activities, to form joint ventures, to raise capital for investment from private finance and to compete in the new global communications network. The BBC will be able to do all that, and still stay in the public sector.

Why is that possible for the BBC, yet we are told that it is not possible for the Post Office as a public corporation? When the Minister comes to speak, he cannot pretend that that option is now not available to the Post Office, unless he intends to vote against the Government's White Paper on the BBC.

But there is another reason why the Government should embrace the option of commercial freedom within the public sector. If they are to be responsible about the future of a major public corporation, they should build that future on consensus. Every party on the Opposition Benches would support the option of commercial freedom in the public sector; that would make it a firm and stable option, which would take the Post Office into the next century. That does not need legislation. It does not even need consultation. It is an option on which we could go snap this afternoon.

But of course, I know that the Minister will not do that. I know that the Government will not do it. They will not do it, because they have been in power for so long that they have forgotten that they are there only as the trustees of public corporations, not the owners of those corporations, to sell them off whatever the rest of us think.

This Government are at the fag end of their days, marking their time until the day that they return to their community. Yet this Administration, on borrowed time, claim the right to end the public status of the Post Office, which goes back 150 years and is supported in public opinion polls by three times the number of members of the public that were prepared to support the Government.

Moreover, the Government claim the right to sell the Post Office without any mandate from any election. If they proceed on that basis, they will make a mockery of parliamentary democracy. They have three months in which to reconsider—the three months that they have given themselves for consultation on the Green Paper.

I asked at the start of my speech whether the Government would listen to the overwhelming majority of the customers in that consultation who will not want the Royal Mail privatised. It was no trick question. It is the real test of whether they will govern according to the wishes of the people or rule by imposing their own political prejudices on the nation.

We will ensure that, during the next three months, the public are given every chance to express their views on the Post Office loud and clear. [Interruption.] The public will notice that, when we refer to that, Tory Members of Parliament already laugh at the idea of listening to the views of the public. I warn them that, if they choose to laugh rather than listen to those views, we shall make their contempt for the views of the public one of the main issues of the next parliamentary year, and we will fight to keep the Post Office where it belongs—in the public sector providing a public service.

4.27 pm

The Minister for Industry (Mr. Tim Sainsbury)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'agrees with the Select Committee on Trade and Industry that the Post Office cannot be retained in its present form; therefore welcomes the publication of the Government's Green Paper on the future of postal services which acknowledges the need for greater commercial freedom for the Post Office and provides increased opportunities for sub-post offices; recognising the importance to communities of Post Office Counters and the Royal Mail, supports the Government's commitment to the universal service at a uniform and affordable tariff, with a nationwide network of post offices; condemns the approach that the only possible solution is 100 per cent. public ownership; and welcomes the opportunity of consultation on the range of options.'. Before I respond to points on the Green Paper, I remind the House that I have a declared interest as a shareholder in J. Sainsbury plc. Recently, the Post Office has transferred a number of its Crown offices to agency or franchise status. Those franchise arrangements are made with a number of stores, including those of the Co-operative movement, and I understand that five of them have been established in Sainsbury stores.

I should make it clear to the House that the choice of private sector franchisees in individual cases is wholly an operational matter for Post Office Counters. Ministers and officials of the Department of Trade and Industry are neither involved in nor informed about such decisions.

Mr. Derek Fatchett (Leeds, Central)

That was the best part of the Minister's speech.

Mr. Sainsbury

I can tell the hon. Gentleman that I now come to the most important part of my speech.

We welcome the Opposition's choice of the Green Paper on the Post Office as the subject for today's debate because it gives us an opportunity to publicise the options in it and the guarantees that it repeats. It also enables us to expose once again what I could almost call the Opposition's North Korean approach, exemplified so splendidly by the hon. Member for Livingston (Mr. Cook). The motion is based on the Opposition's simple proposition which the Government totally reject: public sector good, private sector bad.

The speech of the hon. Member for Livingston exposed his failure to recognise the opportunities that technological change is bringing to the Post Office and, indeed, could bring to Post Office customers if we were to respond positively. It was fairly predictable. We know the style—a nice snappy start and some good knockabout stuff. It reminded me of an England batting performance these days. The start was followed, I am afraid, by a middle order collapse. There were some wild, ill-judged strokes—exemplified by the hon. Gentleman's usual scare stories—an absence of runs scored and an absence of content. There was a little flourish by the tail, but the end verdict has to be that it was another very unsatisfactory performance.

Most of all, the hon. Gentleman's speech was a missed opportunity to be positive and to put clause 4 out of his mind for a change, although that may be too much for the hon. Gentleman. It is no wonder that, like the England cricket team, he has such a consistent record of losing.

Hon. Members have been reminded that on 30 June we published a consultative document entitled "The Future of Postal Services". Let me stress straightaway the word "consultative". The Green Paper sets out the issues surrounding the future of postal services and discusses a number of options for the future of the Post Office. It invites comments by 30 September and all members of the public and organisations with an interest are invited to comment on the proposals. The Government will form a view in the light of all the comments received.

Mr. Michael Clapham (Barnsley, West and Penistone)

My hon. Friend the Member for Livingston (Mr. Cook) referred to the MORI poll. The Minister should be aware that 70 per cent. of the people who took part in the poll were against the privatisation of the Post Office and that 57 per cent. of the people who took part were Conservative voters and were against privatisation of the Post Office. Furthermore, 70 per cent. of the people who took part came from the constituencies of Tory Members. Does not the Minister agree that the poll shows that there is enormous public pressure for keeping the Post Office public rather than privatising it? Should not he be acting on that consultation process?

Mr. Sainsbury

The hon. Gentleman has a touching faith in the accuracy of opinion polls, which he might have found disappointing in the last two elections.

As I said, the point of the Green Paper is to have an informed consultation period, which, I regret, will not be helped by the hon. Member for Livingston giving publicity again to his usual scaremongering stories.

Mrs. Dunwoody

The Post Office put out for consultation over a three-month period the proposal to close the main post office in Nantwich, which has had a post office almost since the 1700s. It received a large volume of letters, postcards and petitions, all of which opposed the closure of the post office. The Post Office, however, has carried out a decision that it took three months earlier and our post office will now be located in a store somewhere else, which is deeply resented by many people and is certainly not the result of proper consultation.

Mr. Sainsbury

The hon. Lady refers to the Crown conversion programme and, interestingly, to what is clearly a commercial decision of the Post Office. One of the many points left unresolved by the hon. Member for Livingston is the extent to which he would seek to interfere with the existing freedoms of the Post Office.

The Government are not consulting on certain aspects of the Green Paper. Those involve the Government's absolute commitment to a number of basic postal services, which we have described as the non-negotiables. The three important commitments are: a universal letter and parcel service; a uniform and affordable tariff structure; and a nationwide network of post offices.

Lady Olga Maitland

Does my right hon. Friend agree that the scaremongering stories whipped up by Labour have only served to worry and frighten elderly people all over the country? Will he confirm that the services provided by Post Office Counters will continue? In particular, how does he propose not only to maintain a uniform stamp price—regardless of where the letters are being sent—but to ensure that that price remains affordable?

Mr. Sainsbury

I shall come to the last point in a moment. I certainly agree with my hon. Friend about the scaremongering: it has a long and well-established history, which is presumably approved of at the very top—or, at any rate, what we expect to be the very top soon. I note that, in December 1988, the hon. Member for Sedgefield (Mr. Blair) said: …the idea that we will have an influx of power stations, all competing on the grid, is nonsense."—[Official Report, 12 December 1988; Vol. 143, c. 683.] I wonder what the hon. Gentleman thinks about that particular scare story now.

Mr. Bruce Grocott (The Wrekin)

Will the Minister give way?

Mr. Sainsbury

I think that I ought to make a little progress. I have given way three times. I may give way to the hon. Gentleman later.

The commitments of which I have just reminded the House were first made in the citizens charter, were repeated in the Conservative party manifesto and the announcement of the Post Office review, and have been reiterated many times in the House. The hon. Member for Livingston, however, has never been one to let the facts get in the way of a good story.

Mr. Grocott

Will the Minister give way?

Mr. Sainsbury

The hon. Gentleman is very persistent. All right, I will give way.

Mr. Grocott

I am grateful to the Minister. Will he answer a simple question? Should the British public give more or less credence to the "absolute assurances" that he has just given about the universal provision of the Post Office than to the "absolute assurances" that he and his colleagues gave before the last election that they would not raise taxes?

Mr. Sainsbury

The hon. Gentleman's fairly predictable question has been covered in the House so many times that I think we would do better to get on with the matter in hand. Undertakings on taxation are a familiar topic, but not one that need concern the Post Office.

Let me deal with the substance of the Green Paper. One fact about which the hon. Member for Livingston and I may agree is that the Post Office is a very successful business, providing a daily letter service throughout the nation at a uniform tariff and with ever-improving standards. It supports 20,000 post offices, providing pensions and similar public services from city centres to the remotest parts of the country. It has just announced its 18th year of subsidy-free profit. It is thus no surprise that the Post Office is highly popular with the public, bracketed with Marks and Spencer—or, perhaps, other private-sector suppliers of life's essentials such as food and clothing.

Despite that success, however, the Post Office faces new challenges. Its markets are changing, and changing fast. The hon. Member for Livingston seems not to recognise that both Post Office Counters and Royal Mail, the main constituent businesses of the Post Office, are faced with increasing competition. For example, virtually no services are now available only at post offices. Stamps are sold in all sorts of places; pensions can be paid directly into bank accounts or building societies—40 per cent. of new pensioners are choosing that option—and television licences can be, and often are, paid for by direct debit.

Royal Mail is under similar pressure. It faces increasing competition from the fax machine, electronic mail and, of course, its traditional rival, the telephone call. The real cost of telecommunications is falling fast, making those rivals ever more competitive. Royal Mail has been developing the direct mail market, but faces strong competition from other forms of advertising. Mail services are becoming more and more internationally—rather than nationally—based.

I am not suggesting that the business is about to collapse, but the fact that the volume of mail posted in pillar boxes fell last year for the first time in more than 10 years is a disturbing sign. Conservative Members believe that diversity of choice for the consumer is to be welcomed, not feared; we neither could nor wish to resist the developments that I have mentioned.

Mr. Malcolm Bruce

What assurances can the Minister give that Sunday collections will continue after privatisation? Sunday collections were introduced only after an extensive campaign in the House. I doubt very much that they are profitable, but they are very much appreciated, especially by people in rural areas who write to their families and friends. It is not the commercial mail that the Post Office is seeking, but the public service which many of us are seeking to protect.

Mr. Sainsbury

I suspect that the hon. Gentleman knows that Sunday collections are by no means universal; they are at the discretion of the Post Office. It is a matter for its commercial judgment and it assesses them on an efficiency basis. It is interesting to note—I suspect that I am wrong—that the Liberal Democrats would, like the Labour party, seek always to interfere. That is one of the reasons why the Post Office wants freedom. Public ownership does not come without constant interference or the pressure for interference.

Mr. Peter Hain (Neath)

rose—

Mr. Sainsbury

I must make some progress. I have been generous in giving way.

Common ground is shared on many of the background facts. I hope that it is also common ground to think that change is necessary to ensure that the Post Office can respond to the challenges and the opportunities that it faces. In particular, it is increasingly clear that the conventional public sector or nationalised industry approach to the management of the business is insufficiently flexible to allow the management to respond properly to the competitive pressures to which I have referred. The report earlier in the year by the all-party Trade and Industry Select Committee concluded that the various public sector constraints on the Post Office's activities were having a detrimental impact on the Post Office's ability to act as a commercial organisation, to deliver an ever higher quality of service to its customers and to meet the challenges and opportunities of international competition. The Government, therefore, make no apologies for having launched the Post Office review and concluding that the status quo is not an option. Indeed, the Select Committee itself, chaired by that noted privatiser the hon. Member for Sheffield, Central (Mr. Caborn), agreed that the Post Office cannot be retained in its present form". Let me now turn to the individual post office businesses, beginning with Post Office Counters. Counters provides the co-ordinating and managerial support services for the network of 20,000 post offices. That network has effectively been run as a separate business within the Post Office since 1986. It has important trading relationships with Royal Mail and Parcelforce, but I should stress that those trading relationships are on an arm's length basis. The most striking feature of the business is that it is based on a combination of public and private sector investment. Approximately 19,000 of just under 20,000 outlets are run as private businesses by sub-postmasters and sub-postmistresses, whose own investment has been estimated to be in excess of £1 billion—well in excess of the public sector investment in the business.

The Government have, of course, considered whether there is a case for changing that structure. They have concluded, however, that no change is necessary. As the National Federation of Sub-Postmasters has made clear, the key issue for the future of the post office network is not its ownership, which is already predominantly private sector, but the need to generate higher turnover for the network and to offer a more efficient and automated service to its clients. The Government accept that view. We have, therefore, concluded that the co-ordinating business of Post Office Counters should remain in the public sector, but that it should be given greater freedom to take on board new clients for the network, thus enabling it to spread its costs over a wider range of activity. The Green Paper contains guidelines setting out those new arrangements, with the necessary safeguards to ensure fair competition.

In addition, the Green Paper confirms the intention to invest at least £130 million in the automation of the benefit-payment system at post offices, enabling Post Office Counters to provide a more efficient and secure service, initially for its major client, the Benefits Agency, and thereafter for other clients.

The House may wish to know that the general secretary of the National Federation of Sub-Postmasters, Colin Baker, has written in the federation's newspaper, saying that the Green Paper should be welcomed by members of the federation… It proves that the Government has listened to our advice". Before moving on to the subject of Royal Mail, perhaps I may deal with one little scare story that has already been raised—the hon. Member for Livingston has referred to it again today—that Post Office Counters could not possibly survive under separate ownership from the rest of the Post Office. It is baloney. There is no cross-subsidy between Royal Mail and Post Office Counters. While there are important trading links, they are based on commercial terms, negotiated on an arm's length basis. The Green Paper makes clear that the Government will continue to require Royal Mail and Parcelforce to offer the full range of public letter and parcel services at post offices.

Dr. Hampson

Is it not ironical that Opposition Members are keen to praise the private-public relationship on the counter side, where there are 19,000 or 20,000 privately owned businesses, yet they are denying the opportunity of the same participation for Royal Mail? Our proposals enable the work force to have a shareholding in the Royal Mail for the first time. That seems bold and imaginative, but Opposition Members have not mentioned it once.

Mr. Sainsbury

My hon. Friend is being rather uncharacteristically kind to the Opposition in saying that it is ironical. I just think that it is contradictory and typical. In no way is Post Office Counters a weak and feeble creature dependent on the charity of big brother Royal Mail. That would be an insult to a successful retail business and I would never insult successful retail businesses. It certainly does a disservice to 19,000 sub-postmasters.

I shall now turn to Royal Mail. The Green Paper sets out three options for the business, which are all designed to give it the commercial freedom that it is universally agreed is necessary. First, the Green Paper discusses the option of giving the Royal Mail the freedom it needs within the public sector. It identifies a number of difficulties, however, in reconciling the scale and scope of the commercial freedoms that the company needs, with the appropriate and responsible control of public sector organisations, relating to public-sector finances and fair competition with the private sector.

Secondly, the Green Paper sets out the case for a conventional 100 per cent. privatisation of the Royal Mail backed by independent regulation. Clearly, that would deliver the Royal Mail the commercial freedoms that it needs. But the Government recognise that many people would prefer to see a closer link with the Government than full privatisation would provide. The Government have, therefore, proposed a third option—at this stage it is their preferred way forward—under which shares in Royal Mail would be sold to the public and to its employees and sub-postmasters, but under which the Government would retain a significant shareholding of 49 per cent. of the shares. Parliamentary approval would then be needed before any sale of those shares.

The Opposition have responded with their traditional, predictable knee-jerk reaction to those three options. First, they have argued that all the necessary commercial freedoms can be given in the public sector, so that there is no need to consider private-sector options. We heard that again today from the hon. Member for Livingston. Secondly, they have suggested that any sale of shares in the company would immediately lead to one of their most distasteful categories of people: rampaging capitalists, inevitably, as they see it, slashing services and destroying communities. Their reaction is entirely predictable: public sector good, private sector bad. Kim Il Sung come back, all is forgiven. Their reactions are entirely predictable, entirely irresponsible and entirely wrong.

Mr. Nicholas Winterton (Macclesfield)

I hesitated to intervene because I wanted to hear the Government's case. Would my right hon. Friend give me an assurance that if, after what I hope will be meaningful consultation, there is a substantial view in favour of option one—that the. Post Office should have commercial freedom—which can be given without too many difficulties, he would support that option? Does he accept that there are a number of Members on the Government Benches who do not wish to see the Post Office put into the private sector because we know the problems that the fragmentation of it would create? Will he give me an assurance that, if there is the widespread support from individuals, in the House and outside—

Madam Deputy Speaker (Dame Janet Fookes)

Order. The hon. Gentleman is making a very long intervention. I think that he has made his point. I call the Minister.

Mr. Sainsbury

I am happy to reassure, if necessary, my hon. Friend the Member for Macclesfield (Mr. Winterton) that, of course, we shall listen extremely carefully to the response to our consultation paper. I hope that he will listen with equal care to what I am about to say about the difficulties associated with the public sector option.

I deal first with the argument that the necessary freedoms can be given in the public sector—the crux of the argument of the hon. Member for Livingston. To listen to some of the statements by the Labour party, we could almost believe that controls on the expenditure of nationalised industries were an invention of this Government. The hon. Member for Livingston must have a short memory. He was in the House, supporting the then Labour Government in 1976, when the investment programmes—much needed investment programmes—of the nationalised industries were slashed by the Chief Secretary to the Treasury, his noble Friend Lord Barnett. It is worth remembering that the hospital building programme was cut by a third. In the Post Office itself, investment nearly halved between 1976 and 1978. As a result, Post Office investment in 1978 was, in real terms, only about a quarter of what it is today. That is why we are not disposed to take lessons from the Labour party on running public industries.

We realise that a business in the public sector has the taxpayer standing behind it. As long as the state owns a majority of the shares in Royal Mail—I say to my hon. Friend the Member for Macclesfield that it does not matter whether that stake is 51 per cent., 70 per cent. or 100 per cent.—it is in the public sector and falls within the public sector borrowing requirement. We recognise the vital importance of controlling the PSBR. We will not sacrifice our belief in the sound management of public finances on the altar of political expediency.

Mr. Robin Cook

I am sure that the Minister would not wish to describe the Government's White Paper on the BBC as political expediency. Can he now explain to the House why all the difficulties that he adumbrated in relation to the Post Office staying in the public sector and commercial freedom apparently do not apply to the BBC and why his Department cannot get the same deal out of the Treasury as the Department of National Heritage can?

Mr. Sainsbury

I suggest that the hon. Gentleman reads carefully the Green Paper on the Post Office and that he reads the document on the BBC equally carefully. Having read those documents, he will, I hope, immediately recognise that whereas the Royal Mail wants to enter joint ventures where it is the controlling shareholder and the controlling operator, the BBC is seeking not to do that, but to enter joint ventures where it is the minority partner—a very different circumstance. There is, of course, a wide range of other difficulties which are obvious to most of us.

Mr. Cook

The Minister has mentioned one difficulty. Let us, for the purposes of hypothesis, agree on the following. Let us suppose that the Post Office said that it was willing to be a minority shareholder in joint ventures. Would that remove the Minister's objection? What is his next objection?

Mr. Sainsbury

I do not want to be driven entirely into discussing the BBC. I merely say to the hon. Gentleman that the BBC's commercial freedom, as set out in the White Paper, is entirely consistent with the general rules on public sector freedoms, which we have set out in the Green Paper. The Government are encouraging the BBC to develop its commercial activities with private sector partners and finance under the private finance initiative.

The Green Paper makes it absolutely clear that the Post Office, too, could benefit from that initiative. The question is whether that would meet the commercial needs and opportunities facing the business. In the case of the BBC, as I have said, it does because it enables it to operate through the joint venture companies I have described. What the Royal Mail needs is something different. It wants to be able to compete with other Post Offices and to put more business through its own network. It is not looking for partners who will control any joint venture with majority stakes; it is looking for full commercial freedoms. I say again to the hon. Gentleman that the two cases are entirely different.

However, I recognise that there are some freedoms that are compatible with pubic sector status. We are giving greater freedoms, for example, to Post Office Counters to take on new clients. However, the differences between the Royal Mail and Post Office Counters are considerable. Counters has a unique combination, to which my hon. Friend the Member for Leeds, North-West (Dr. Hampson) referred, of public and private sector investment.

The freedoms which the Royal Mail is seeking, however, go much further. It wishes to borrow, possibly extensively, on private capital markets. It wishes to offer new services to the private sector, based on its existing skills, but developing new skills and services. It wishes to operate in the international as well as the domestic market, striking new partnerships with the private sector, but also competing head on with it. It needs to compete to forge its own role in a rapidly changing and developing communications market against major international competition. It needs real management control over these activities.

The Government wish to see the Royal Mail go down that route. It does not follow that such a route is compatible with the public sector. The public ownership option, clearly dear to the Labour party, leaves three unanswered questions. First, how can competition with the private sector be fair? Secondly, will there be any Government interference in commercial matters? The signs from today's debate are that there would be. If there was no interference, what would be the purpose of public sector status? Thirdly and most importantly, with Treasury controls and the straitjacket of the annual expenditure round, how could the Royal Mail fund its long-term investment requirements?

Mr. Ken Purchase (Wolverhampton, North-East)

More Government investment.

Mr. Sainsbury

The hon. Member for Wolverhampton, North-East (Mr. Purchase) seems to overlook—he was not here at the time—what happened between 1976 and 1978, under the then Labour Government, to investment in the Post Office; it was halved. I suggest to the House that we should think long and hard before we leave the Royal Mail subject to the restraints that go with the public sector.

Mr. Purchase

The Minister is right to say that I was not in this place then. However, I recall those events. Why does the Minister now talk about the management of this enterprise as though, at present, there is no proper management control? Yet from what we have heard, the Post Office is an immensely successful enterprise.

Mr. Sainsbury

The management are asking for commercial freedom. If we are serious about commercial freedom—I make this point to my hon. Friend the Member for Macclesfield as well, if he will kindly listen—we must realise that it is clear that only in the private sector can that freedom be found. For the Post Office to be in the private sector, the Government must reduce their stake in Royal Mail below 50 per cent. The Government believe that doing that will provide the best prospects for the future of Royal Mail. We believe that, without commercial freedom, there is a risk of long-term decline.

The Green Paper makes it absolutely clear that the legislation authorising any sale of shares in the Royal Mail would also establish a postal regulator and regulatory system which would be expressly designed to ensure the maintenance of the key public service elements. There would be, for example, an absolute requirement on the new company to deliver mail to every household in the country, six days a week, and to maintain a uniform tariff structure—my hon. Friend the Member for Macclesfield asked about this earlier—so that a letter sent from Westminster to Victoria would cost the public the same as one sent from Cornwall to the outer Hebrides. There will also be tariff control, with the Government confident that tariffs will continue to be reduced in real terms.

The Green Paper also makes it clear there will be additional obligations on the company to continue to provide free services for the blind, to provide redirection services and to offer recorded delivery, registered post and a full international service. If the consultation exercise persuades us that we should lengthen this list, we shall do so. In all these areas, the regulator will be empowered to ensure that the Royal Mail meets all its obligations to an ever higher standard.

Mr. Nicholas Winterton

My right hon. Friend has outlined many social obligations which will be imposed on the Post Office and, no doubt, enforced through a regulator. Is not that Government interference? How does that lie with the strictly commercial criteria that the Government are outlining to the House? To my mind, the public sector, with commercial freedom, is where the Post Office should lie because of its substantial social obligation and responsibility.

Mr. Sainsbury

I make the same recommendation to my hon. Friend as I made to the hon. Member for Livingston—that he carefully reads the Green Paper and then considers the position of British Telecom. I hope that he supports its being in the private sector. The social obligations we are talking about in the Green Paper are those that are imposed on British Telecom.

Mr. Andrew Welsh (Angus, East)

Will the Minister give way?

Mr. Sainsbury

I must make progress. I have been over-generous and I know that many hon. Members wish to speak.

I should also briefly mention Parcelforce. The Government have decided that, if they are to sell shares in the Royal Mail, it would be a rather pointless step to insist on separating out the parcels business while giving Royal Mail greater commercial freedom. The Royal Mail management has made it clear that its customers would wish it to offer a parcel service to complement its letter services. With appropriate safeguards to ensure fair competition, the Government are content for the two businesses to remain together.

The Green Paper also makes it clear that the Government continue to be committed to the development of greater competition in postal services. In particular, any legislation following the Green Paper will allow the Government to fulfil their commitment to reduce the level of the monopoly closer to the price of a first class stamp.

The Green Paper also sets out a number of other areas in which the Government see scope for greater competition. The guiding principle will, however, continue to be that the Royal Mail must continue to be able to provide a universal service at a uniform tariff. Some degree of monopoly will therefore be necessary to ensure that. The Green Paper also covers a number of other issues of importance to the users of the Royal Mail. It makes clear, for example, that the traditional royal associations will remain and that VAT will not be charged on stamps in the future.

I congratulate the Opposition on choosing the Post Office for today's debate—despite, incidentally, their claim that no debate is needed because everyone agrees with them. The debate is well timed because it is absolutely essential that the way forward we finally choose for the Post Office commands public confidence. May I emphasise again that the Green Paper is a consultative document? We hope, therefore, that today's debate will help to focus on the rational arguments, the real points, that are discussed in the Green Paper and not on the absurd allegations that are propagated by the Opposition.

If the Opposition parties wish to put forward constructive comments—an unlikely contingency perhaps —on any of the options or have concerns about the safeguards we propose, let those points be made. Let us accept, however, that change is necessary. The debate is about how that can be best brought about.

I believe that the combination of our proposals for Post Office Counters and our preferred option for Royal Mail would provide an appropriate and exciting way forward for the future. It would give the Post Office's businesses the real commercial freedom that they need. It would provide opportunities for those directly involved with the future of Royal Mail to take a direct stake in the company—in many cases on special terms. It also would protect the public through a strong and independent regulatory structure, while offering scope for greater consumer choice both in post offices and in the letters market.

We believe that the customer has everything to gain from our policies and much to lose from the Opposition's policies. I commend the amendment to the House.

5.1 pm

Ms Kate Hoey (Vauxhall)

I am pleased to have the opportunity to participate in this extremely important debate on an issue that concerns millions of people.

It is rather sad that the President of the Board of Trade is not here, particularly as it is quite clear that Post Office privatisation is on the right hon. Gentleman's personal agenda. I am sorry that he did not have the opportunity to hear the excellent speech made by my hon. Friend the Member for Livingston (Mr. Cook), who put the argument against privatisation clearly and incisively and explained why Opposition Members and, given what the hon. Member for Macclesfield (Mr. Winterton) said, perhaps many Conservative Members want to keep the Post Office together in the public sector and stop its being privatised.

It is clear that the Government have no mandate to conduct even a debate on the proposed privatisation of the Post Office—there was no mention of such privatisation in their election manifesto. As my hon. Friend the Member for Livingston said, privatisation of the Post Office was a privatisation too far for the leader of privatisation, Mrs. Thatcher. It is strange that the President of the Board of Trade is pushing for a privatisation that, even at the height of privatisation, the then leader of the Conservative Government, Mrs. Thatcher, was not prepared to make.

The Minister has said that the Green Paper will be treated as a consultation document, but we already know what people think about the proposal. In March 1994, the first MORI poll found that 68 per cent. of people opposed privatisation and, as has already been noted, 53 per cent. of those polled were Conservative voters. The same poll discovered not just that people are opposed to privatisation, but that 81 per cent. of the public want the Post Office to be offered more commercial freedom while remaining in the public sector. The Opposition and 81 per cent. of the public are therefore in favour of the commercial freedom option offered in the Green Paper.

The consultation exercise will last just three months and during most of that time the House of Commons will not be sitting. I have not the slightest doubt, however, that the vast majority of responses received by the Minister will be opposed to privatisation. Will the Minister tell us what criteria the Government will use when making judgments during the consultation exercise? If between 90 and 99 per cent. of the public responses oppose privatisation and support giving the Post Office more commercial freedom, will the Minister give a commitment that that will be the end of the matter? As my hon. Friend the Member for Livingston has said, if we want commercial freedom, we can have it today. The two Front Bench teams could get together and, in agreement with the Liberal Democrats and all other parties, work out the rules to give that freedom to the Post Office.

Mr. Malcolm Bruce

We must also consider what will happen to the Post Office during the privatisation process. It is asking for commercial freedom now and everyone except the Government, who insist on delaying matters for another 18 months to get unnecessary legislation through the House, agrees that it could be given commercial freedom. Does the hon. Lady agree that the Minister should consider the effects of the Government's policy?

Ms Hoey

I agree absolutely. The Government are holding back the country because they are holding the Post Office back from being able to compete internationally and on the European market. It is ludicrous that we have been waiting two years for the Green Paper, especially as it includes an option that all the Opposition parties can support. If today's debate does anything, I hope that it will show that there is cross-party support for keeping the Post Office in the public domain while offering it greater commercial freedom.

Why are the public so opposed to privatisation? It is not as though there has been a huge Labour party campaign to try to get people to oppose privatisation. We will launch such a campaign, but we already know that there is great support for retaining the Post Office in the public sector because the vast majority of people are quite happy with it. They know that it gives them a good service. They know that it is making a profit—little in this country makes a profit today—and that a large proportion of that profit is given back to the Government to be used for other purposes. There is no widespread dissatisfaction with the service offered, which was not always the case in previous privatisations.

We all rely on an efficient, trustworthy Post Office. It is worth remembering that about 25 million households are visited by a postman or postwoman each day. That represents terrific contact between postal workers and the public. People care about the service. Such strength of feeling does not exist only in inner-city areas. It is particularly strong in rural areas, where for many people the arrival of the postman or postwoman on a bike or in a van is a real link with civilisation. I come from a rural area in Northern Ireland that is just the same today as it was in my youth. One of the key events of the day was the arrival of the postman—in those days there were no postwomen—because he did not bring just the hoped-for letters from relatives abroad and all sorts of other people, but the local paper. If the postman did not arrive, we did not get the local paper. The postman also brought messages and all manner of other things, which was probably not in his job specification but it was part of the social service that he provided. That still goes on to a greater or lesser extent in parts of the country and it would be a tragedy if it disappeared.

None of us has confidence in the Government's commitment to a nationwide letter and parcel service with daily delivery to every address in the country. The problem is that the people simply do not believe them, just as they did not believe what the Government said or the commitments that they gave previously.

There is no commitment not to transfer to an Americanised system in which people must go to the bottom of their high-rise block of flats or to the end of their lane to collect the mail. There is no reason for such a reduction in service, but that is what would happen if the Post Office were privatised.

The Government have made no commitment to a second delivery which, as it does not make a profit, is a service. It continues because it is a public service. It is one of the social commitments and extras that the Post Office has been able to provide. Only public ownership has prevented the Post Office from abolishing the second delivery.

Dr. Liam Fox (Woodspring)

During Report stage of the Telecommunications Bill, the Opposition spokesman said that, after privatisation, people in rural areas would never be connected to the telephone system. Labour was wrong then—why should the hon. Lady be right now?

Ms Hoey

If the hon. Gentleman reads in Hansard tomorrow what my hon. Friend the Member for Livingston said, he will see that my hon. Friend answered that specific point, so I shall not go over it again.

A cross-subsidy amounting to about £30 million a year is provided to keep less viable post offices running. I shall not go into too much detail about other services such as the 180 post buses, which provide the only form of transport in some rural areas, as I am sure that others will want to mention them.

Mrs. Angela Browning (Tiverton)

Will the hon. Lady give way?

Ms Hoey

No. Eighty per cent. of those post buses are already subsidised. If we lose that opportunity—

The Parliamentary Under-Secretary of State for Technology (Mr. Patrick McLoughlin)

rose—

Ms Hoey

I suppose I had better give way. Are you in charge now?

Madam Deputy Speaker

Order. I am in charge.

Mr. McLoughlin

And the hon. Member for Vauxhall (Ms Hoey) should always remember that. Can the hon. Lady tell me a little more about the subsidy for rural services that she is talking about? For example, where does it come from?

Ms Hoey

On the whole, it comes from local authorities, but if there were no cross-subsidy there would be no opportunity to transfer extra money from one part of the Post Office to another.

Another matter that must be mentioned again is the revenue provided by the Post Office to provide the articles-for-the-blind service. I do not believe the commitment that has been given with regard to that service either. I do not believe that, once the Post Office is placed beyond democratic accountability to Parliament, such a service will be allowed to continue. The profit margin of the Post Office is usually about 5 per cent. of the gross turnover. If there is any change which results in the Post Office being taken out of the public service, what are considered as necessities for some people will be seen as extras by a private company and they will be dropped.

I know that this is an important day for some hon. Members from Northern Ireland and that, therefore, the attendance of hon. Members from Northern Ireland is not very high. Northern Ireland has a particular difficulty with its postal service because of the peculiar nature of the political situation there. I pay tribute to the dedication of the postal workers in Northern Ireland, who have continued to provide a service throughout the great difficulties of the security situation across the sectarian divide. They are a special part of the public service in Northern Ireland.

In terms of unemployment and the economic situation in Northern Ireland, any reduction in postal jobs would be absolutely terrible for the economic interests of that community. Belfast has the return letter section of the Post Office. At present, some 300 jobs are provided in that section. If the Post Office is put in the private sector, one of the first things that will happen is that the return letter section will get the chop. If it does not get the chop, people will certainly have to pay a large amount of money to get their letters back. That is another area that must be examined.

I mentioned earlier the way in which communities are linked to the postal service. When I first came to England as a student, my mother, at 4 o'clock on a Sunday afternoon—there were Sunday collections in those days; they then stopped but, fortunately, they have resumed—would post whatever they had for lunch that day, either a piece of chicken or perhaps some bacon, in a letter sealed in whatever way she thought best. It was delivered to me at 7 o'clock on Monday morning, not quite still warm but certainly fit to be eaten. I have had an affection for the Post Office ever since. The miracle of someone being able to put something in the post at 4 o'clock on Sunday afternoon that could be eaten in north London at 7 o'clock the next morning is something of which we should be proud—[Laughter.] Hon. Members may laugh, but that is precisely the emotional attachment which people have for the Post Office and postal workers—[Interruption.] Some may say that it is irrational.

Tory Members are silly if they underestimate the feeling—it is almost love—that people have for the Post Office. There are many reasons why the Government will lose the next election, but if they go ahead with privatising the Post Office, that will certainly be one of them. They should not underestimate the power of the people on this issue. Thousands of people will be writing letters. The consultation exercise will give the Government one result. Today, I want to hear the Minister pledge that he will fulfil whatever the people decide on the issue.

5.17 pm

Dr. Keith Hampson (Leeds, North-West)

The problem with the speech of the hon. Member for Vauxhall (Ms Hoey) is that it conveyed, above everything else, total and utter complacency. The hon. Lady started by saying that people are happy with the Post Office. That is currently true. But the President of the Board of Trade is trying to secure change, reform and, in particular, new private investment to ensure that we have a better tomorrow—that we improve the situation, rather than let it deteriorate. If people realised what we identified in the Select Committee report, they would also realise that there are many serious threats to the happiness that they currently experience with the Post Office.

For the first time, there is a potential decline in the standard of service. One of the reasons for that is the level of investment on the one hand and competition on the other. To meet the increasing competition that the Post Office faces, not only from private sector companies in this country but from postal services in other countries, there must be more investment.

I do not think that a single person in this country or a single hon. Member believes that a Labour Government would be more generous in terms of public sector investment than anything that we have seen so far. Would a Labour Government seriously stop the external financing limit? Is Labour saying that if the Post Office is profitable, will not take money back into the Treasury? Labour never did that with any nationalised industry. Would it seriously do it now?

Of course, if Labour does do that it will face exactly the same problems as those faced by the management of the Post Office this very year. Managers cannot invest in post buses on the scale that they would like; they have had to cut their investment in postal vans and other equipment because the Treasury has taken more and more of the Post Office's profits. No matter what Government are in power, that is what the Treasury will always do. Perhaps the Labour Front-Bench spokesman would like to announce that the Opposition will scrap the external financing limit system and the Treasury will no longer take the money—

Mr. Jim Cousins (Newcastle upon Tyne, Central)

I am grateful for the opportunity that the hon. Gentleman has afforded me. On page 17, paragraph 93, of the Select Committee's evidence he speaks about a halfway house and urges his right hon. Friend the President to adopt it. Does the hon. Gentleman stand by his commitment to a halfway house, or has he abandoned it?

Dr. Hampson

Nothing on the record states that I backed a halfway house. If the hon. Gentleman reads the whole transcript, which he clearly has not done, he will see that I put to the President of the Board of Trade examples from across the world—from New Zealand to Sweden, from Canada to Holland and Germany. In all those countries the post offices are being steadily commercialised to the point of public limited company status, and then on to privatisation. I kept asking the President why our system cannot do likewise. I kept being told that it was because the Treasury would not allow it.

The Select Committee decided that if we do not go ahead and privatise the whole service, we should at least free it up—and that is one of the options in the Green Paper. Certainly a certain amount can be done to provide greater flexibility and to allow the service to retain a higher proportion of its profits. That, too, is in the Green Paper. Conceivably we could change some of the regimes that control joint ventures, but only up to a point.

In the end there are two strict disciplines. The first is that, even under Labour, no Government could allow a public corporation to go on borrowing money in the private markets regardless, because that will only add to the public sector borrowing requirement. So although we may allow the corporation more freedom in commercial decision taking, that fundamental discipline will remain. All the Treasury mandarins will insist that the Post Office cannot indiscriminately add to the PSBR.

Equally, the Post Office will never be given enough freedom in that way. Post Office managers have pointed out that they do not want a halfway house. They want to be certain, when they draw up their plans for investment and for raising the money for that investment, that they can take the decisions themselves. They do not want to have to return to the Treasury for its authorisation.

Of course the process can be improved. We referred to this in the Select Committee as the fishing licence syndrome. It took the best part of a year of argument between two Cabinet Ministers to ensure the freedom of the Post Office to sell fishing licences. I am delighted that the President of the Board of Trade won the battle with the Treasury, although I doubt whether that triumph will go into his obituary. But why on earth were Ministers arguing about it at all? There may be some liberalisation, but the Post Office would still have to get approval for certain projects. That takes time, and it is not the sort of commercial freedom that the management wants. Nor is it what is happening elsewhere in the world.

Clearly, the system has to change. I believe that hon. Members on both sides of the House agree—they certainly agreed in the Select Committee—that the nationalised framework cannot be maintained. Given the competition and the opportunities, it is just not viable.

Mr. Cousins

rose—

Dr. Hampson

I have already given way to the hon. Gentleman, who I suspect will make a speech of his own.

A Labour Government in charge of a public corporation controlled by the Treasury might like it to have certain privileges that gave it an advantage over the private sector. That gives rise to another of my criticisms. The private sector will not be happy with the sort of deals in which a public corporation would want to get involved. The Post Office was prevented from buying an airline. It might be extremely sensible for it to acquire its own airline, but that would enable it to compete with other airlines for all sorts of business. The private sector companies would have something to say about a corporation, backed by taxpayers' money and Government guarantees, behaving in that way.

The Post Office rightly wants to go into bulk-mail deals with printing companies—it might even want to buy one, with considerable knock-on effects.

In theory, such deals are excellent, but they could go wrong, and they would give the Post Office a privileged position vis-à-vis its competitors. They could also go seriously wrong, and if the state picked up the financial pieces, that would only underline a measure of protection that the private sector does not enjoy. For all those reasons a halfway house is not acceptable.

Mr. Malcolm Bruce

Is the hon. Gentleman seriously suggesting that if a privatised Post Office got into financial difficulties a Government could walk away from it and not pick up the pieces? Does he accept that private companies might regard it as unfair that a privatised corporation continued to have the protection of a publicly guaranteed monopoly? Is there not some unfairness in both solutions?

Dr. Hampson

The truth is that this House must produce the legislation, which must contain certain fundamental reassurances for the British public. We all accept that the Post Office must have social responsibilities. In the case of British Telecom, the privatisation Bill included certain terms and conditions—BT has to maintain rural services and loss-making rural phone boxes. Similarly, in this case we shall require a universal service to all parts of the country, however remote, and at a standard price.

Secondly, there will have to be a regulator. We are learning as we go on about the regulatory process, and the Post Office regulator will have to be effective and tough.

Thirdly, whatever Opposition Members may say, the Government are not privatising the Post Office: this is a half-privatisation. There will still be the old links, and all the concerns about the connections between the Royal Mail, the Post Office network and the post offices in our high streets are misguided. They will be preserved. Moreover, for the first time the work force will have a say. I should like at least 10 per cent. of the business to go to them, thus involving them in the business and providing yet another safeguard for the social responsibilities of the service.

To answer the hon. Member for Gordon (Mr. Bruce) further, I am optimistic about the growth of this enormous £4 billion enterprise. It has the capacity to raise huge sums on the financial markets. I see no reason why a privatised Post Office should be any less of a success story than BT or British Airways. Why do people spend all their time dreaming up scare stories? All the worst imaginable options are being put to the British people in order to frighten them. The trouble is that the Labour party has such a narrow vision, its policies are so much determined by its wish to stay in the past, and it is so influenced by the unions' support that it will not look beyond the way in which things have always worked.

There is a new world of opportunity out there, ready to be seized. Why cannot the corporation be successful worldwide? We have a chance now to increase its international presence and to make a great success of it. We have an opportunity to improve the quality of the service that we give to our domestic customers as a result of the growth and success that that private operation will enjoy, especially on the international scene, and we shall have bold and imaginative developments, such as share ownership for the work force. There will be improvement internationally, and improved customer provision and service throughout the country—in rural districts as well as towns.

We can make that positive achievement if we pursue the option in the Green Paper—a balanced partnership between the public in the form of the Government, the public and the work force as shareholders and the management of the corporation. I believe that the management want to press ahead with that option, but people do not trust the Government and the Treasury—and for heaven's sake, given what Opposition Members say, day in and day out, why should they?

For heaven's sake, let us seize the opportunities. This will be a great success story for the Post Office, for the Royal Mail and for its work force.

5.30 pm

Ms Judith Church (Dagenham)

I thank you, Madam Deputy Speaker, for allowing me to make my maiden speech in this important debate, when so many hon. Members wish to speak.

First, I pay tribute to my predecessor, Bryan Gould, who served the people of Dagenham—and, before that, the people of Southampton, Test—loyally and energetically. Bryan had a distinguished political career, spanning two decades, during which he worked on trade and industry, economic and environmental matters. I know that he will be missed by many people in the House and in Dagenham, and I am sure that the House will join me in wishing him well in his future career.

My other predecessor, John Parker, was Dagenham's first Member of Parliament, a Member for 48 years and Father of the House. Some Members here today will remember him for his work as chair of the British-Yugoslavian Parliamentary Group. I can imagine his sadness, had he been alive today, at the tragedy that has unfolded in that country.

I am proud to be the third Member of Parliament to represent Dagenham. Built in the 1920s and 1930s, it has a long-established and close community, with strong traditions of public service. Many of its local councillors have served for 30 or 40 years. It is an area of great opportunity, which is crying out for investment, and rejuvenation of its housing and regeneration of its industry.

Dagenham has the largest manufacturing work force in London, with successful companies at the leading edge of technology, such as the Ford Motor Company, GPT Telephone Cables and Rhone Poulenc Rorer. Those companies have not succeeded through paying low wages and having poor working conditions and low health and safety standards. I know that because, before coming to the House, I worked in industry, including seven years as one of Her Majesty's inspectors of factories.

There I worked with both sides of industry to improve workplace standards. That experience proved to me that only those companies, large and small, that invest in people by providing high-quality training and good working conditions can compete and win in today's global markets.

I believe that national economic success goes hand in hand with the provision of high-quality local services. Strong economies invest in modern, vibrant services—schools, housing, transport systems—that enrich and improve the lives of their citizens.

The people of Dagenham rely on their local postal service, run in the public interest for the benefit of all. Now the Government want to go ahead with the maddest, saddest privatisation of all, that of the Post Office—mad because our Post Office is one of the most successful postal businesses in the world, sad because the existence of an efficient national postal service is the hallmark of a modern economy.

However, the Government cannot find any new test of efficiency. They cannot identify any fundamental failings. The Post Office is not a creaking system in need of overhaul; far from it. The Post Office is efficient and competitive, a tribute to public enterprise. The Government cannot bear that enterprise and innovation to be in the public sector.

Let me pause for moment, and examine what the President of the Board of Trade has to say in his Green Paper on the future of postal services: The Post Office has for centuries made a vital contribution to our national life. Who could argue with that? The Post Office is one of the nation's unifying forces". Who could argue with that? The Government is committed to the maintenance of these services. That is where the argument breaks down.

The Government will not do that by modernising the Post Office. They will do it by destroying it, by pushing yet another of our country's great national assets away from our people and towards pin-striped predators—or at least, they will try.

People know what privatisation means—a two-tier postal service where the standard provision becomes so poor that it is laughable.

The President of the Board of Trade could have pledged today, had he been here, to back the Post Office in its drive to compete and sell in Europe, but he will not unless it is removed from the public sector. He could have pledged to protect the consumer from dramatic price increases, but he will not, and, as in the case of water prices after privatisation, which have increased by 67 per cent., the cost of the first class post will increase in leaps and bounds. People are already asking, "Which will come first, the 50p first class stamp or a general election that will save us from that fate?"

The Government will try privatising the Post Office, which is so unpopular among their supporters, let alone people throughout the country, but trying is all that the President of the Board of Trade will be able to do. It is all that he has done since he first set up the review of the Post Office's future two years ago this month. It is not the 30-page Green Paper that has taken the time; it has been the politics of it.

The President of the Board of Trade knew that he could not even begin to get privatisation through without a great deal of persuasion, not of the Opposition, not even of the country, but of his own colleagues. So, aided and abetted by senior Post Office managers, who, like the rest of the privatised sector, can smell the money they can make through that privatisation, the President thinks that it has got to the point where it might—it just might—get through its stages in the House and elsewhere.

It is not a genuinely consultative Green Paper, putting forward arguments objectively. The best option for the Post Office, and for Britain, as we have heard today from my hon. Friend the Member for Livingston (Mr. Cook)—greater commercial freedom while keeping the Post Office owned by and for the whole country—is simply dismissed out of hand. The Treasury "will not wear it".

Full privatisation is no good either, because the Government recognise that many people would prefer a closer link between the Government and Royal Mail than that option would provide. In plain English, the Government recognise that many people want to keep the Post Office just as it is, operating for everyone in the country, on behalf of everyone in the country.

We are therefore left with a fudged and bungled operation—partial privatisation, with the Government keeping 49 per cent. of the equity. Why? Because that is another way of trying to smuggle this astoundingly ill-judged privatisation past the people.

The Government will not succeed, because, when people start to realise just what the Government are planning to do to their Post Office, there will be a large increase in the Post Office's business. That has already happened, as constituents in their thousands, not only in rural areas but in inner cities and suburbs, write to tell Members of Parliament that they do not want their post office, a vital part of the daily life of most people in the country, to be privatised. That is when Conservative Members will suddenly realise that the Green Paper on the future of postal services is something else—a Green Paper on the future of their jobs.

Labour's policy on the future of the Post Office is right, because it is the policy of the people who use the Post Office. They want a good service, and they are getting that now. They want a nationwide price, a national network of post offices and nationwide delivery to every address in the country, not just to those from which the private sector can make the most money.

There is a case for positive change in the Post Office. The Post Office must constantly change to remain the world's best. It must be given the commercial freedom that its management seeks, with the full support of its work force, sub-postmasters and sub-postmistresses and its customers. People now know what privatisation means—big salaries for a few at the top and big prices for the customers. That is what happened with electricity, gas and water. We will not let it happen to our Post Office.

5.40 pm

Mr. Edward Leigh (Gainsborough and Horncastle)

It is a great pleasure to follow the usual courtesies and congratulate the hon. Member for Dagenham (Ms Church) on her speech. I thank her on behalf of the whole House for her kind words about her predecessor Bryan Gould, who was and is held in enormous respect in the House, not just because he was a rebel—there is no harm in being a rebel occasionally—but because he was a thinking and a principled one. We wish him every success and enjoyment in New Zealand.

I also congratulate the hon. Lady on the competence with which she delivered her speech, which was a classic of its kind. She spoke with great knowledge and movingly about her constituency and addressed the arguments extremely well, although we did not agree with all of them. We wish her well. She said that her predecessor but one became Father of the House. I am sure that we will continue to listen to her speeches until perhaps she becomes Mother of the House some time in the next century.

There are two debates about the Post Office—the real debate and the political debate. The real debate about the nature of the ownership of Royal Mail and the degree of commercial freedom that it should have has already been determined not by politicians, not by the House, but by domestic market pressures, and especially by increasingly cut-throat international competition.

The political debate has yet to be determined, and either side could win it in the coming year, although I suspect that the row over any privatisation will soon settle down. The dust will soon settle as it has settled over every privatisation. I want to deal with the political debate because that is where the opportunities and discretions still lie for the Government. I should like to make a few suggestions to ease their path. Perhaps I should first address the real debate.

I was given responsibility for the Post Office as long ago as the spring of 1991. I immediately began a series of discussions with the Post Office and with Sir Bryan Nicholson, the then chairman of the Post Office board. I know that I shall be accused of this, so I freely admit to starting with the view—or, from the point of view of some people, a prejudice—that, in a commercial situation, private companies are better equipped to create commercial opportunities. I accept that I suffer from that view or prejudice, but any objective observer would conclude—certainly all those who advised me soon came to the view—that politics alone has denied the Royal Mail a role in the private sector to which it is well suited.

When I took responsibility for the organisation, I felt that we had dilly-dallied for too long, and that we should grasp the nettle that politics had prevented us from grasping for about 13 years. I set the ball rolling, and it has been rolling for a long time. But the end is in sight, and the Government have said that their preferred option is privatisation. That is in respect of the Royal Mail, but the situation with Post Office Counters is a little different. Just as the overall debate is confused between politics and the real world, so this debate is also confused between Royal Mail and Post Office Counters, which, in effect, are completely different businesses.

Royal Mail is now essentially a pure business operation overwhelmingly concerned with carrying letters from business to business and from business to people. The business of carrying letters from people to people is a small part of the total turnover. Royal Mail is increasingly subject to international competition. The vision of Rowland Hill, an adviser to a former postmaster general, of a uniform tariff and service worked well in a primitive age of bad roads. In strictly commercial terms, it probably does not make much sense, but I quickly add that we do not live in a strictly commercial age, thank God.

In this strictly commercial set-up, there is an enormous social dimension, represented by the daily walk of the postman up the garden path. That is the last daily delivery left. In many ways, the postman seems the last relic of a bygone age. I do not see anything wrong with relics or tradition. It would be an act of consummate vandalism and political madness by the Government to tamper with that tradition of the daily walk up the garden path. Let us keep our uniformed postman. Let him roll on undisturbed into the next millennium, but in the process please let us preserve some semblance of reality.

For years, Post Office management have waged with the Government a forlorn battle to deliver mail "once over the ground". Whoever owns the Post Office, that has to happen. It is important that it happens once a day, and that could and should be guaranteed.

The public view the Post Office largely through the wrong end of a telescope, at the postman delivering his letters. The commercial reality is of increasingly cut-throat international business in which other post offices, particularly those of Denmark, Holland—about which we have heard—and Germany, freed of Government ties, would increasingly cream-skim profitable bulk business from our Post Office.

The counters business is even more of an irony. It is largely a shop window for Government services, mainly social security, but 19,000 of those 20,000 shop windows are privately run, albeit under ludicrously severe Government control and restriction on what they can and cannot sell. In short, things are in a mess, contrary to the rosy view that is often painted of the Post Office. The public view of a successful, friendly organisation is in reality under increasing commercial threat to its viability, internationally to Royal Mail and domestically—a point that has not so far been stressed in the debate—to Post Office Counters.

If nothing is done, if we take the easy way out politically—I fully accept that it would be the easy way politically: it is the route for which Labour has opted—the Post Office is doomed to gradual decline. If we are to save the Post Office, we must have the intellectual honesty and vigour to propose solutions that will work. For instance, we must not say that somehow the public can own an organisation but not control it and be responsible for its borrowing.

The case against so-called commercial freedom in the public sector was made brilliantly by my hon. Friend the Member for Leeds, North-West (Dr. Hampson) and by the Minister of State. It is set out strongly in chapter 5, paragraph 5, of the Green Paper. Labour speakers have signally failed to answer the points set out there.

The Green Paper states that the controls that the Government levy on the Post Office reflect the fact that the risks assumed by nationalised industries are ultimately underwritten by the taxpayer. In particular, Government controls over borrowing by public corporations (all of which, by definition, fall within the public sector borrowing requirement (PSBR)) provide a discipline over all funds which are raised with the backing of the taxpayer and for which the Government is ultimately accountable. Without such controls, nationalised industries would have a clear advantage over commercial rivals". Labour Members have not answered, and cannot answer, the overwhelming case against so-called commercial freedom in the public sector. It is a red herring and a canard, and simply does not work. In the real world, one must make a choice between a nationalised industry that one owns and ultimately controls, and a privatised industry.

Mr. Cousins

rose—

Mr. Leigh

The Opposition spokesman is pregnant with a question, so I give way to him with some pleasure. I hope that he will answer that point.

Mr. Cousins

Does the hon. Gentleman think that the markets will believe that a company in which the Government will have a 49 per cent. shareholding could ever go bankrupt?

Mr. Leigh

The hon. Gentleman fails to understand the point made by my hon. Friend the Member for Leeds, North-West (Dr. Hampson). Had he listened, he would have heard my hon. Friend talk about all the joint ventures that the Post Office wishes to undertake—for example, buying a printing business.

Is the hon. Gentleman suggesting that joint ventures, purchases and risks will ultimately be underwritten by the Government? That is what would happen if we retained public sector control of a business but allowed complete commercial freedom.

Mr. Cousins

The most significant example offered by the hon. Member for Leeds, North-West (Dr. Hampson) was that of the airline venture. I remind the hon. Member for Gainsborough and Horncastle (Mr. Leigh), who was the Minister who stopped it, that the venture involved the Post Office taking a 49 per cent. share. Is he really saying today that, as a Minister, he vetoed a 49 per cent. share because the business was still in the public sector, but that the whole case of the Green Paper, which depends on a 49 per cent. share, is something quite different?

Mr. Leigh

If I did not allow something that the Post Office wanted to do, it must have been under Treasury instructions.

I commend the Government's balanced package in the Green Paper, which deals with the two fundamental problems facing the Post Office. By selling 51 per cent. of Royal Mail, the new company will become a huge asset to Great Britain plc. It will be able to defend itself against international predators, just as British Telecom and British Gas have done. They have become powerful players in the new global marketplace.

I have always argued that the public must notice no difference. With the help of the regulator, I hope that they will not. Incidentally, what happened to my idea of calling the regulator the "Postmaster-General"? It has obviously sunk without trace since I left the Department. We should resurrect some of the great old titles. Why call the regulating body something as dreary and boring as Ofpost, or whatever?

As a sort of outrider for the Government, I believe that a 100 per cent. sale would make more commercial sense. Why retain 49 per cent. if, as is said in the Green Paper, the Government will not intervene in the company? What is the logic in that, apart from politics? [Interruption.] I accept that politics is important.

The Green Paper states in chapter 5, paragraph 21, that the Government would not expect to vote its shareholdings on resolutions moved at General Meetings of the company although it would retain the power to do so. When I was responsible for British Telecom, in which the Government were a major shareholder, I was under strict instructions from my civil servants not to try to have any direct influence in the company. What is the point of retaining 49 per cent. if we do not make use of it? I apologise for this slightly naughty interlude, but I am sure that my hon. Friends on the Treasury Bench will forgive me.

The public are not really interested in whether the Government own 49 or 51 per cent.; they are interested in the future of the postman, and in service delivery. Why should not the postman become, in time, a real community deliverer, especially in rural areas? In particular, elderly people would welcome someone calling at their doors every day. There is a vast network of people—the postmen—ready and able to visit every door every day. Why are we just using them mainly to post one lonely item of junk mail through a letter box? Why are we not fully using the service that could be provided by the daily deliverer?

Too many people in society are lonely and remote. The postman's job is often low-paid, mechanical and boring. Would he not welcome an upgrading of his role to something more personal and responsible? There is no limit to the services that he could provide—such as milk, newspapers, groceries and personal contact. There is no limit to what elderly or rural people might conveniently receive from a daily community deliverer. We should not allow one of the last of the personal daily services to wither on the vine like so many others. We should use the new commercial opportunity to provide a greater public service.

It has been a titanic struggle to persuade the Treasury to allow sub-post offices to sell a wider range of commercial services. I congratulate the Minister on winning that struggle. However, I suspect that it has happened only because the Treasury reached the sensible view that Royal Mail privatisation would not otherwise be deliverable. It is sensible to keep the headquarters operation in the public sector to reassure the public. However, it actually means very little, as increasingly it would become a clearing house for Government business.

My right hon. Friend has won his battle to allow post offices to pay pensions over the counter. As we know, not to do so would be political madness. I welcome the £130 million-worth of automation announced in the Green Paper. That will help to reduce fraud, and to make the operation more efficient. However, I suspect that, with encouragement and an ever wider use of bank accounts, more and more pensioners will choose not to draw their pensions at local sub-post offices. Therefore, diversifying the business is not only good sense from the Government's point of view: it is essential for survival.

I am disappointed with what the Government say in chapter 4 about the commercial activities in which sub-post offices will be allowed to engage. It is full of mealy-mouthed phrases and I detect the dead hand of the Treasury. It says, for example: Any displacement of private sector activity would in these circumstances be voluntary…the proposed activity would help create a new market for services which had previously not been available to the public…the entry of Post Office Counters is likely to lead to significant growth of existing markets … Post Office Counters is unlikely to have a significant impact on existing private sector companies". What do those phrases mean? Do we detect the hand of the Treasury in seeking to tie down sub-post offices in what they can or cannot do? I note that my hon. Friend the Economic Secretary is now on the Front Bench. I assure Opposition Members that sub-post offices are threatened not by the privatisation of Royal Mail, but by the diminution in their services as more and more people take their benefits through the post. The only way to save them is to give them greater and greater commercial freedom. The mealy-mouthed phrases that I have quoted will not help. Sub-post offices must be given full commercial freedom to deliver services if the essential network throughout the countryside is to be retained.

Overall, the Government have produced a package that is probably the only conceivable one. It could have been identified within months—certainly I and those working with me did so. However, the very length of time that the Government have taken has been a shrewd political move. I am sure that my right hon. Friend the President of the Board of Trade, whom I admire immensely, decided to play it long and allow public and political opinion to mature.

Above all, he has given the senior Post Office management the confidence, which they understandably lacked at first, to insist both explicitly on full commercial freedom and implicitly on privatisation. Even the very Post Office brief provided for our debate mentions the fact that the Germans and the Dutch are moving towards privatisation. That is the real debate among socialist and Christian Democrat Governments around the world. They know that there is no choice. Only the British Labour party has a black hole in which all creative ideas are sunk, never to return until they have been proven by us.

The Opposition are wedded to a concept which, in their heart of hearts, they know simply will not and cannot work. We need only consider the unlikely event of a Labour Government owning the Post Office, yet tamely accepting a massive increase in Post Office borrowing to innovate, or a Post Office determined to implement unpopular decisions such as "once over the ground".

What is Labour's policy on "once over the ground"? Would it tamely allow a Post Office that it controlled, albeit with so-called commercial freedom, to implement a policy that was fundamentally unpopular with its constituents? Of course not.

One has to reach the conclusion that this so-called commercial freedom in the public sector is a political gimmick—no more, no less. I understand, however, that, if elected, a Labour Government would buy back control of Royal Mail. That leads me from the real debate to the political debate. We must ensure that the public appreciate what a disaster that would be. The key lies in the effectiveness of the regulator or the postmaster-general in ensuring a peaceful transition to private ownership, but it depends equally on the nature of the sale.

I am delighted that Post Office workers are to receive 10 per cent. of the 49 per cent. sold. It should give them a stake in the business. I should like that stake to be bigger, but I understand that stock exchange rules forbid the work force from receiving more than 10 per cent. of the shares.

I understand from the Library that rule 4.8 of "The Admission of Securities to Listing", usually known as the Yellow Book of the stock exchange, states: preferential allocation is allowed in respect of the securities not placed firm, normally only to existing shareholders, directors, employees and past employees of the issuer of its subsidiary undertakings, up to a maximum of 10 per cent. in aggregate of the value at the offer price of the securities not placed firm. That makes no sense, but it is a stock exchange rule. The only point we need to understand is that we can sell off only 10 per cent.

I have been doing some research, and I understand that, after incorporation but before flotation, stock exchange rules do not apply. I hope that the Economic Secretary or the Under-Secretary of State will clarify that. There are separate rules of public sector issuers set out in chapter 22 of the Yellow Book, which state that such issues "need not comply" with the provisions of chapter 4.

The Library contacted the stock exchange and informed me: The Exchange, however, was at pains to stress that were the Post Office to be privatised it would obviously be a very special issue and special conditions would probably apply.". My contention is that it would be possible to sell a greater share of the 49 per cent. to Post Office workers. The possibility of selling a large part of the business to the work force is an attractive one. The greater their stake, the less enthusiastic the workers will be about a Labour Government getting their sticky and impecunious fingers on the business in which they themselves have a large stake.

What the Labour party will assume to be a popular policy of buying back a business could well rebound on them, even if Post Office workers have only 10 per cent. of the business. If I am right, it might be possible to sell them more than 10 per cent. of the business.

We could go still further. We should commit ourselves in our manifesto to introducing legislation to sell a further tranche of shares to Post Office workers so that Post Office workers will know that, if a Conservative Government are elected, they will have the opportunity of buying more shares at a preferential rate, but that if a Labour Government are elected, they will lose that right altogether.

Of course, we could sell the shares—I am doing further research on it—on the basis that they are paid dividends like anybody else, but the shares can be sold only into the work force pool, ensuring that the work force always retain a powerful and profitable input into the business. All that would be on top of what would be a popular sale to the public, extending opportunity and ownership in the way that we know so well.

In conclusion, we can produce a popular package not only doing what is right for the business, but convincing the work force and the public alike that we can create a dynamic business for the future in which sub-post offices, particularly in rural areas, sustaining village shops and providing an essential community service, will be given a new lease of life, in which postmen can acquire a profitable stake in their own business and be given opportunities for extra and rewarding work and in which the public will have confidence that a great British company is fighting for Britain abroad and at home, delivering the traditional service that we all value.

6.3 pm

Mr. Malcolm Bruce (Gordon)

I join the hon. Member for Gainsborough and Horncastle (Mr. Leigh) in congratulating the hon. Member for Dagenham (Ms Church) on her excellent maiden speech. It demonstrated her confidence as a new Member and her knowledge of her own constituency and its industries. I am sure that we shall hear a great deal more about that in her time here.

We all appreciated the hon. Lady's remarks about Bryan Gould, who had friends across the House, was well liked by us all and will be missed. I hope that the hon. Lady will not take it personally if I say that the only reason why I wish he were here today instead of her is that he might have been able to tell us exactly what happened to the Post Office in New Zealand as a result of the ideas that the Government are bringing into play. I am sure that we shall hear a great deal more from the hon. Lady and we look forward to that.

This is not an early debate—it is extremely late. It is more than two years since the Post Office started its campaign of pressure for greater commercial freedom. As the hon. Member for Vauxhall (Ms Hoey) said, the Government have been holding the Post Office back. It is extraordinary to hear passionate speeches from Government Back Benchers about the enormous need to enable the Post Office to respond to competition when it could have been doing so a long time ago were it not for incompetent and dithering Ministers who even now have not been able to produce a clear-cut, comprehensive or intellectually coherent set of proposals.

The Green Paper is confused and contradictory. All sides accept that the status quo is not an option and nobody wishes to defend it, but how do we deliver greater commercial freedom and maintain a high standard of public service? In reality, there is no disagreement about that either: the argument is about how to get there. It is absurd for Conservative Members to argue the difficulty and then to suggest that the only possible solution is the one produced by the Government. On 1 February the President of the Board of Trade told the Select Committee that this was an extremely complex and difficult issue; it has not suddenly become easy and it would be foolish for Conservative Back Benchers to pretend that it has.

The constraints currently operating in the Post Office have been and are Government imposed; they do not come from anywhere else. The Government appear to be saying, "Because we have imposed a set of unacceptable, inflexible restraints on the Post Office, we must privatise it because we lack the imagination to change the rules to meet the needs of the Post Office."

The Government use the Dutch post office, or at least the competition from Holland, as a prime source of authority for their argument. We are told that the Post Office must be freed to respond to competition, especially from the Dutch. And so it must, but the competition is coming from a Dutch post office which is currently operating—and has been for 25 years—with exactly the kind of commercial freedom that is proposed and rejected in option one of the Government's Green Paper. It is true that the Dutch Government are planning to sell shares in their post office—but only 30 to 40 per cent. of them. The Dutch have no difficulty in grasping the distinction between 49 per cent. and 51 per cent. Clearly, a Dutch coalition Government—that is what they usually have in Holland—do not have the ideological hang-ups of an intellectually split British Conservative Government.

The issue appears to have become a football for leadership contenders who need to express their right-wing credentials in public, in a sense flirtatiously. They need to act like political tarts to see how much support they can get to secure their political future at the expense of the real needs of the Post Office, which requires a more disciplined and intellectual approach. The Government are saying, "We have tied our own hands and now we cannot do anything because our hands are tied." They have adopted an absurd position. In the meantime, during the past two years they have been messing about with the Post Office in an unhelpful and fruitless way.

Two years ago, the President of the Board of Trade came to the Dispatch Box to tell us how essential it was to sell off Parcelforce as a separate entity. I have opposed that throughout. I believe that it has been an absolute disaster for the consumer and has achieved nothing in improved delivery of service. However, I welcome the fact that the Government have acknowledged the error of their ways and accepted the case for bringing letters and parcels back together. The argument also reinforces the fact that parcels and counters are not separate and distinct, as Conservative Back Benchers are arguing.

I will illustrate that with an anecdotal experience of my own. I complained to my local postie that, not being home much of the time, I was fed up with being told that my bound copies of Hansard were available for collection at a parcels office six miles away. He told me that he was not allowed to leave parcels if I was not home. I do not want to get that postie into trouble, but I have come to an arrangement with him. He said that he could leave parcels for me at the local post office 200 yards up the road. I was expecting a parcel of books—not Hansard—that I wanted to read as a matter of urgency, so I told the postie that I would appreciate it if he would do that. In fact, however, I did not collect the books for some days after they were delivered and when I asked at the post office for the parcel the lady behind the counter turned to her colleague and said, "Gladys, what do we charge for storage?" I hasten to stress that it was a joke, but the serious point behind it is that Post Office Counters was essentially saying, "The parcels service is nothing to do with us; we do not see parcels business as part of our job, because we are not paid for it." My concern about the separation of Post Office companies into different ownership is that traditional co-operation will disappear.

The assertion that there is no case for keeping counter business and the Royal Mail together should not readily be accepted, and it is not convincingly argued in the Green Paper. It was included as a political expedient, in the hope of buying off threatened Conservative Back-Bench rebels. I say to them—I am sorry that the hon. Member for Macclesfield (Mr. Winterton) is not in his place—that they had better consult. They may return from the summer recess with a rather less sanguine view of the Government's case.

As to the Royal Mail proposals, the President of the Board of Trade has argued—and specifically did so to me in his evidence to the Select Committee—that giving the Post Office commercial freedom is unfair to private sector companies. I have consistently argued that, by the same token, giving a private company the protection of a monopoly will also be unfair and companies will complain about it. There is no simple solution to that dilemma, as the Government suggest. I can imagine people saying, "We want the Post Office monopoly removed to give us a level playing field." We all know that the consequence of removing the Post Office monopoly will be that a universal service to every household, every day, will collapse. That is a dangerous precedent.

The Government say that Post Office borrowing must be considered part of the public sector borrowing requirement. That is not the case with the Dutch or French Governments, so there is no reason why it should be with the British Government. It was never the case in all the decades when the Government were a major shareholder in British Petroleum. The Government may argue that BP was different because it was an international company dealing in commodities.

Mr. Cousins

There was British Nuclear Fuels Ltd.

Mr. Bruce

There are many examples—the BBC was also mentioned. The Government are able to make a distinction when it suits them.

The hon. Member for Livingston (Mr. Cook) informally told me that the PSBR and Treasury rules are not a science but an art meant to serve the needs of the Government and the public. The Government are using them as an ideological blunt instrument, which is not relevant to current needs.

Comparisons were made with BT, but its privatisation came at a time of dramatic technological change, which allowed BT to provide cross-subsidy services and to generate enormous profits. That gave the impression of a windfall benefit which would have occurred in any case. I am not saying that BT's privatisation did not bring benefits, but it is not a valid comparison.

Mr. Peter Ainsworth

Supposing that the hon. Gentleman's recommendations were accepted, the Post Office taken out of the PSBR and the external financing limit reformed in the way that he suggests, what would be the effect on the gilts market and the Government's ability to raise capital there?

Mr. Bruce

The hon. Gentleman knows perfectly well that it would not be much different from the Government having 49 per cent. of the Post Office—as a previous exchange demonstrated. It is not possible for the Government to walk away from the Post Office in any case. They can say that the Post Office is entitled to raise private money but that the Government will not underwrite risk capital. It mystifies me that right-wing Members who claim to be radical have so little imagination. It is possible to find different options and solutions to meet different needs. Difficulties are being manufactured to support an ideological case rather than because there exist cast-iron, rigid, inoperable or unchangeable rules.

I said that the separation of the Royal Mail and Post Office Counters would be artificial. In the long run, it is likely to prove unsustainable. It was suggested to me by someone inside the Post Office that separation is a car park solution—a buy-off while things are sorted out, but not a permanent solution. Everybody acknowledges that POC needs investment as well as freedom to develop additional services. The Green Paper does not make clear where that money is to come from, but only states that the Government recognise the need for urgent modernisation and investment in computer equipment. It identifies a cost of £140 million, which it is hoped will come from the private sector.

If that money is to come from the private sector, is that not privatisation by the back door? It appears that services are being kept in the public sector, but so much of the money would be raised from the private sector that the operation would effectively be privatised. In response to the intervention of the hon. Member for Surrey, East (Mr. Ainsworth), if it is all right for Post Office Counters to raise £140 million on the private market, what is the difference between that and the Royal Mail? The Government contradict themselves at every twist and turn.

Mr. Cousins

The Post Office has accumulated £1 billion of public sector funds as a result of its commercial successes over the past 10 or 12 years. If it were privatised, there would be nothing to stop it switching out of those public sector funds into other kinds of investment. That would also affect Government finances.

Mr. Bruce

There would be an immediate loss of access to revenue, plus a continuing loss of some of the dividend that might otherwise be paid—although the Government are shrewd enough to realise the need to maintain access to the dividend.

I want to press the Government harder on what is meant by retaining the right to determine for Post Office Counters what is fair competition. The hon. Member for Gainsborough and Horncastle (Mr. Leigh) was right to make reference to a lot of mealy-mouthed words that need explaining. There is a danger that the counters operation is being given the illusion of freedom but that that will turn to disappointment because the Government have decided that they will not allow the counters to develop certain operations. I am a little more cynical than the hon. Member for Gainsborough and Horncastle. Given the experience of recent years, it may be that a rich backer of the Conservative party will say, "I don't like those services being developed by Post Office Counters—and if you will not use your powers to block them, I will cease making donations to the Conservative party."

The Economic Secretary to the Treasury (Mr. Anthony Nelson)

indicated dissent.

Mr. Bruce

The Economic Secretary snorts. He knows perfectly well that is the way that political favours have been bought in recent years. The idea that the Government back free enterprise, competition and markets is not one that has ever impressed me. I believe that they are buyable by the highest bidder. Some successes were at the expense of other companies. Reference was made to British Airways. It may be a successful and competitive airline, but it has achieved that by destroying every British-based competitor along the way, using all sorts of dubious methods. The Government regard that as free and fair competition, but I do not.

Mr. Clifton-Brown

Will the hon. Gentleman give way?

Mr. Bruce

Not on that point. [Hon. Members: "Oh."] I have raised it many times before in the House and my views are well known. Lord King and Cohn Marshall are tired of hearing them.

How will the Post Office network develop in future? What will be the future role of Crown offices? They currently number 750, but that figure is rapidly reducing. I represent the largest constituency in Scotland and the fastest-growing constituency in Britain; yet it has no Crown offices. When I protested about the closure of Crown offices, the Post Office said, "We will improve the service by offering them to private operators." That happened in the short run, but I know from hon. Members representing other constituencies that that is not always the case.

I have then asked the Post Office what the role of Crown offices is. If there is no difference, or the service its even better, why is it keeping any of them? I have never had a clear answer to that question. We are entitled to know. I suspect that the reason is that the Post Office needs enough of those branches in its network to know how they operate, to be able to train and to provide the management back-up. So I worry what will happen when those offices change hands in future, and do not go to people who have been trained within the Post Office system and have the knowledge and understanding of how they work. What will the Post Office do then?

In my constituency I have been supporting a campaign to open a new post office, at Burghmuir drive in Inverurie.

Mr. Cousins

What is your majority?

Mr. Bruce

My majority is nearly as large as the number of consumers who would use that post office.

I wish to make a serious point. In that instance a private individual, a Mr. Alex Black, is saying, "I wish to open a post office and a pharmacy in a shop unit and in both cases I have to go to some other organisation to get a licence, which is currently being denied." Mr. Black has enormous support from all the residents in the area, and there are plans for building hundreds more houses nearby.

Interestingly, the Crown office that was privatised two years ago is the principal objector to Mr. Black's giving that extra service, which the community wants, and the Post Office is backing the previous Crown office against the new operator. If the network is to be protected, we ought to see new post offices being opened and not just existing offices being closed, especially where there is population growth. Although I represent the fastest growing constituency in the country I have seen only one new post office open in 11 years, but I have seen several closed and many more cut from being full offices to operating community hours. We want to achieve a balance, and we need answers both from Post Office management and from Ministers on how the position is likely to develop.

The Green Paper refers to VAT, but no one has mentioned it in the debate so far. I am not at all happy with what the Government say about VAT in the Green Paper, which is: the Government is satisfied that none of the options it is considering for Royal Mail and Parcelforce would mean imposition of VAT".

Mr. Cousins

On letters.

Mr. Bruce

Yes, on letters.

I am not satisfied just because the Government are satisfied. After all, the Government were satisfied that they were in the right on the transfer of undertakings directive, and after 11 years they turned out to be substantially in the wrong. That is costing the taxpayer a great deal of money even now. I ask the Minister to undertake to obtain during the consultation exercise a clear opinion from the European Commission on what the position will be—not what the Government think, but what the Commission thinks. That is a major factor, and if the Government have got it wrong that could push up the price of a first-class letter to nearly 30p. We are entitled to an answer to that question.

I asked the Minister of State earlier about Sunday collections, but I did not receive a reassuring response. The Minister looked surprised that anyone should mention Sunday collections, and implied that no guarantee was required. As a member of the Select Committee on Trade and Industry, I remind the Under-Secretary of State that we campaigned ceaselessly on that matter for several years. As hon. Members might expect, I pay tribute to Sir Robin Maxwell-Hyslop, who always proved himself a terrier in his dealings with the Post Office, and who succeeded in persuading it to reintroduce Sunday collections. Those have now proved extremely popular, and are much appreciated.

That is exactly the kind of business that Conservative Members have told us represents the declining unprofitable end of the mail business. It is all about letters and cards from grannies to granddaughters, and so forth. That is most important in terms of the Post Office's social obligation, but it is not profitable.

Mr. Paul Tyler (North Cornwall)

Is that not an example of precisely the kind of service about which all kinds of assurances about the quality of service after privatisation have been made to peripheral areas of the United Kingdom, such as the areas that my hon. Friend and I represent? Yet whether it concerns water, gas or electricity, as soon as privatisation is bedded down the operators say that it is too expensive to provide that service to the more peripheral and scattered areas and there is a reduction in quality of service. We pay more for less.

Mr. Bruce

I agree with my hon. Friend.

I am coming to the end of my speech, but I still have some important points to make. The Government say that there will be a licence, a regulator and guarantees of certain services, which they have identified as the most important guarantees—although I have mentioned some that they appear to have forgotten, and that I hope they will consider.

I do not suggest that the Government are insincere in saying that. I believe that they recognise the importance of those services and want to guarantee them. However, the problem is that once the Post Office has been put into the private sector and given its freedom—that is what the Government wish to do—the pressure of competition will inevitably mean that the management will say, "We are sorry, but to respond to competition we have to get rid of the loss-making services, which means closing some of the network, reducing daily deliveries and cutting out second deliveries"—those are important to business, but not necessarily profitable—"and we have to consider surcharging the outlying areas: we cannot guarantee next day delivery to the outer Hebrides unless people are prepared to pay a surcharge, or whatever."

That is how things developed in New Zealand. I do not suggest that what happened there has to happen here, but there is a real danger. Even with good will and serious intent, the Government could find that they have created something over which they have lost control, and brought about the commercial pressure that threatens the public service.

That brings me to my conclusion of principle. My party and I did not oppose in principle previous privatisations, such as those of gas and electricity. But we objected to the way in which the Government proposed to carry them out, and especially to their failure to introduce effective competition at the time of privatisation. In those cases we have been proved right. The gas industry has now had to introduce competition in a much more painful and unstructured way, and that will have to happen with the electricity companies, too. In the meantime, consumers have lost out. The fact that electricity prices have fallen is not the point. Management have managed to divert a lot of funds to maintain high dividends. That has been good for investors, but according to the watchdog consumer protection body, consumers have lost out and electricity prices are at least 5 per cent. higher than they should be.

I shall not even mention water, which is already a big political embarrassment to the Government. We opposed gas and electricity privatisation not on principle but because of the competition aspect. However, we all agree that with the Post Office, competition is not the answer in relation to the core service: nobody is arguing for competition there. Everybody recognises that there must be a guaranteed monopoly—and there is a point of principle there. If there has to be a publicly guaranteed monopoly, that monopoly must be accountable to the public sector.

That is a fundamental principle, and one that even Conservative Members should accept. Why should the House vote money, provide support or give a licence to a body, yet not be able to provide proper accountability to the people who are elected to this place to control such matters, and to the people who sent us here? I do not want detailed intervention in the day-to-day management of the Post Office—I recognise its need for commercial freedom—but it is providing a public service and we are entitled to demand minimum standards. I believe that the Government accept that, but they do not seem to accept the fundamental principle on which it should be based.

We do not favour over-tight regulation of the public sector, but we recognise that the public service must be accountable within the public sector. As the hon. Member for Gainsborough and Horncastle said, there is no difficulty in introducing commercial realism and allowing competition to develop in areas in which it can and should do so while at the same time maintaining proper public accountability.

Outright privatisation would not achieve that. Commercial freedom would. Selling some of the shares—especially to members of the work force, and perhaps more widely—may be a good option, and would provide a commercial test of the way in which the Post Office was operating. We as a party are prepared to consider that, but selling the majority of the shares removes the public accountability test, and on that count the Government's proposals fail.

6.28 pm

Mr. Douglas French (Gloucester)

I am interested in the long-term safety and security of Post Office jobs. I have a large regional sorting office in Gloucester, as well as many small post offices. Hundreds of my constituents depend on the Post Office for their livelihood, and I want to make sure that the jobs on which they depend are safe not only now but for the future.

I start my contribution with Eastern avenue, Gloucester, where the major regional sorting office is located. When one visits that sorting office, as I have on a number of occasions, the most striking things that one observes are, first, the employees' tremendous pride in the service that they are providing—it is an excellent work force which wishes to provide a first-class service and succeeds in doing so—and, secondly, the considerable investment that is taking place there.

Particularly striking is the way in which new machinery, introduced for the better handling of letters, has, within two or three years, become out of date as a result of technological development. More mail is therefore being handled faster, and will continue to be handled faster, with a smaller work force as the technology of sorting equipment improves. The inevitable conclusion is that the improving technology of letter handling is likely, in the foreseeable future, substantially to reduce the job opportunities for sorters of mail and other manual operatives in sorting offices.

The first question that strikes me as being important, looking at the matter from the standpoint of local jobs, is whether anything can be done to prevent those otherwise certain job losses. Obviously, it is not possible to stop introducing new technological machinery. One cannot pretend that it has not been developed. However, it is possible to take steps to ensure that the volume of mail and the profit that it generates increases rather than falls.

Unfortunately, as several hon. Members have already said, the profitable part of Royal Mail is threatened in a number of respects. Several hon. Members have mentioned the Dutch post office. I am sorry that the hon. Member for Gordon (Mr. Bruce) has left the Chamber—[interruption.] I am pleased to see that the hon. Gentleman has come back at the right moment. I hope that he will forgive me if I update him on the position regarding the Dutch post office.

The Dutch post office, under the umbrella of KPN and embracing PTT Post and PTT Telecom, was partially privatised on 13 June. The hon. Gentleman may wish to know that that partial flotation proved extremely popular. It was three times oversubscribed with a strong demand from not only domestic but foreign investors. The KPN shares set a bourse record for volume with 35 million shares changing hands, more than half of which were sold to foreign institutions. About 20 per cent. were sold to buyers in Britain and 18 per cent. to buyers in the United States. That has left KPN in Holland embracing PTT Post as the third-largest quoted company on the Amsterdam bourse, preceded only by the Royal Dutch Shell group and Unilever. Not surprisingly, PTT issued a stamp to commemorate that important stage in its development.

I mention that because it demonstrates the tremendous confidence of not only the management of PTT but the public in Holland in the capacity of their post office to perform and serve not only the domestic market, but, most particularly, the international market in a way which makes it possible for it to lead the world in post office services.

Much reference has been made today to the sort of competition that Royal Mail potentially and actually faces from the Dutch post office. I shall give a few examples, because although it is all very well to talk of competition, we must understand what form that competition takes.

One of the most profitable sectors of Royal Mail business is bulk commercial business-to-business deliveries. The Dutch post office, with tremendous success, is bidding for bulk United Kingdom direct mail for destinations outside Holland and the United Kingdom. If it creams off business that would otherwise have gone through Royal Mail, Royal Mail and everyone who works for it is the loser because that business is lost to an alternative enterprise.

Secondly, the Dutch post office is bidding for bulk mail for destinations within the United Kingdom. There, it is important to appreciate the effect of the accounting conventions of the Universal Postal Union which militate against the Post Office that is doing the delivery. The revenue that is collected for a postal item, or in this case millions of postal items, is split, four fifths going to the country of origin—not the poster but the post office handling it—and one fifth going to the country that effects the delivery. When that business is lost, Royal Mail is saddled with the bulk of the work, because there is far more work to be done in delivering to individual destinations than in collecting, for only a fifth of the revenue.

Mr. Malcolm Bruce

The hon. Gentleman has just made a useful contribution to the debate. For those who have not been party to it, it explains what the competition is and the urgency for a response. The House should be grateful to the hon. Gentleman for that. I have no doubt that if the Post Office is privatised the share offer will be popular and I agree that it needs to be able to respond to the competition. However, that does not remove the fundamental point of principle as to whether that can be done within the public sector. It is important to underline that, although the Dutch post office has been partially privatised, it still is in the public sector and the Government have majority ownership. That is what we are advocating.

Mr. French

I shall come later to whether one can have commercial freedom in the public sector. But if one speaks to senior managers of PTT they will say that they have taken only the first step in the direction of selling the majority of shares. At the moment only a minority of shares has been sold, but eventually it is expected that the majority of shares will be in public ownership.

Mr. McLoughlin

My hon. Friend is on to an important point. The hon. Member for Gordon (Mr. Bruce) referred to the privatisation of the Post Office, but my hon. Friend has usefully put it on the record that we are talking not just about the Dutch post office but its telecoms operation. That 30 per cent. flotation was a large one for that country.

Mr. French

I agree entirely with my hon. Friend.

Why is it that the Dutch post office can organise Itself to win the sort of business that I have described? First, it can quote commercial tariffs in a way that our Post Office cannot. All the special deals that come from Royal Mail are according to a pre-determined formula, as with Mailsort, where the price to be quoted is already fixed and the nature of the deal or the customer placing the business is not taken into account.

In contrast, the Dutch post office can come forward with specific tariffs for specific customers if it knows that it is in a competitive position and wants to win a particular piece of business. It can enter commercial alliances, as my hon. Friend the Member for Leeds, North-West (Dr. Hampson) mentioned. It can also embark on the provision of a combination of services, a point that my hon. Friend the Member for Leeds, North-West made clearly.

A typical example is the fulfilment of a total postal requirement: that is, the design and printing of a piece of direct mail; the enclosing of that item in an envelope or wrapper; the generation of the addresses to which it will go; and the sharply negotiated transportation from A to B by the best means possible and therefore at the most competitive price. We must take notice of the fact that the Dutch post office can enter into joint ventures and alliances to achieve such services. It can compete on all those fronts, but the Royal Mail is left to compete only on sorting and delivery services. One can easily see that it will not be long before it is wiped off the postal market place for that type of business.

If there were a few more Opposition Members present, I would no doubt hear them argue that there is not much to worry about—foreign post offices do not have the right to deliver to United Kingdom addresses, which accounts for the bulk of Royal Mail business, because the Royal Mail retains its letter monopoly. That view, however, is misconceived. It presupposes that the sending of a letter or circular through the post is an irreplaceable and indispensable service and that it will always be needed. The same view was taken by stagecoach operators, who eventually found, to their cost, that they were wrong.

As a medium of communication of information, the written or printed piece of paper that is delivered from door to door faces strong challenges. Other hon. Members have referred to fact that the fax is creaming off some of the business, as is the telephone. British Telecom's recent advertisement campaign highlighted the amount of telephone time that one can buy for the price of a postage stamp. Such competition—one medium competing with another—will increase and the Royal Mail must be able to respond to it.

It does not stop with the fax or telephone. More sophisticated forms of communication such as electronic mail, airwaves, telematics, satellite communications and other forms of data transmission are potential competitors for the humble letter going through the post.

Mr. Cousins

I am following the hon. Gentleman's argument closely and I agree with it. The Post Office says that 13 per cent. of that vital commercial market is under its control. If the competition is that severe, what is the economic and commercial basis of the guarantees that the Post Office, if it becomes a fully private company, will have a uniform price and universal delivery?

Mr. French

Uniform price and universal delivery will be much more within the grasp of Royal Mail if the rest of its business is profitable. It will be more capable of delivering universality if it has commercial opportunities. The reality is the opposite of the arguments advanced by Labour Members today.

The trend is away from what many see as an archaic mode of communicating information whereby messages are transported from one side of the country to other, and from one side of the globe to the other, on pieces of paper. The Royal Mail's business is rooted in that function. Any long-term examination of its business position is bound to raise alarm bells as to where it will be, not in two years', but in 20 years' time, if action is not taken now.

The Post Office's only answer to those developments should be to achieve a position, first, whereby it can compete vigorously and effectively for its share of the postal market, whatever the size of that market will be; and, secondly, whereby it can stake its claim for a proper share of those businesses that will inexorably nibble away at its current core activity. It must stake its claim to alternative means of communication.

That means that a measure of commercial freedom is vital. I have listened to the speeches of Opposition Members and I waited patiently to hear which Opposition Member would spell out what he meant by commercial freedom in the public sector. The hon. Member for Livingston (Mr. Cook) did not say how that could be achieved. He made only an assertion that it would be possible and that it could be done, but he did not tell us the means. The hon. Member for Vauxhall (Ms Hoey) said that the Post Office should be given more commercial freedom, but she did not explain how she proposed to do it.

My hon. Friend the Member for Macclesfield (Mr. Winterton) said that commercial freedom could be given without too many difficulties. Again, he did not tell us how he would achieve it. It was the same with the Liberal party spokesman, the hon. Member for Gordon (Mr. Bruce). He paid lip service to the desirability and possibility of commercial freedom without explaining how it could be achieved.

Commercial freedom in the public sector is, for all practical purposes, a contradiction in terms. It cannot be achieved in the public sector. To achieve proper commercial freedom, the Post Office must have the opportunity to take proper risks. If it is still tied in some way to the public sector, it will not be able to take those commercial risks without, at some stage, the taxpayer having to underwrite the risk. I defy any Opposition Member to explain how it would be possible for the buck, ultimately, not to stop with the taxpayer and with the Treasury.

Commercialisation in the public sector would not work. My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) was emphatic that it would be irresponsible for the Treasury, if the Post Office were still in the public sector, not to maintain the system of the external financing limit and to take the cream off the profit, which it has done for so many years, in the interests of the taxpayer. It would also be irresponsible for the Department of Trade and Industry not to take an interest in the investment decisions in which the Post Office engaged. The DTI, the Treasury and the Government have an interest in preserving the best interests of the taxpayer and they could not do so in those circumstances.

Mr. Cousins

In many ways, I consider the issue to be the heart of the argument. How does the hon. Gentleman respond to the example of British Nuclear Fuels plc, which operates as a wholly publicly owned company? How does he respond to the example of what are regarded as trading activities, which are regarded as contingent liabilities only for the public sector borrowing requirement and the public expenditure statements?

Mr. French

I accept that those examples are departures from the broad principle, but they are not departures of the same type. We are dealing with a commercial enterprise of massive proportions. They are far greater than those in the examples that the hon. Member gave. We are dealing with commercial risks of enormous size. If they were not well judged, they could incur enormous losses for the taxpayer. The principles of public financial management and the responsibility of the Treasury to ensure that undue risks are not taken by commercial enterprises where the taxpayer has to pick up the bill must be adhered to and they should be adhered to in this case.

Mr. Oliver Heald (Hertfordshire, North)

Does my hon. Friend agree that, in terms of the scale of the business, British Gas offers a far better analogy? It has been able to decrease its prices, to enter new world markets and, at the same time, to protect the taxpayer and customer through an extremely efficient regulator.

Mr. French

I entirely accept that; I shall deal with the question of the regulator in a moment.

Mr. Peter Hain (Neath)

Will the hon. Gentleman give way?

Mr. French

No; other hon. Members wish to speak.

If the Government retained a majority shareholding, they would still ultimately be in control. Royal Mail borrowings would still be part of the public sector borrowing requirement. Even more important, the Government would have not only a right but a duty to interfere in any investment decisions that Royal Mail and the Post Office chose to make. That is a recipe for not giving the Post Office the commercial freedom that it needs.

The Post Office must be allowed to set its own financial targets, to make its own investment decisions and to raise capital in the market place when it considers it necessary for the development of its business. It is absurd that at present—even in the case of fairly trivial investment decisions—the Post Office must approach a Government Department and, understandably, wait for some time to secure a decision that may not always be the one that it wanted.

The Post Office should also be freed from the straitjacket of the external financing limit, and transferred to a normal corporation-tax system that will allow it to make a reasonable contribution to the Exchequer. It should not be hemmed in as it is now.

Mr. Clifton-Brown

Does my hon. Friend agree that an EFL of £230 million—nearly four times the size of the 1992 limit—is draining a successful Post Office of resources that it badly needs for reinvestment purposes? Is not the desirability of access to the capital markets one of the main arguments for disposing of a large shareholding?

Mr. French

I entirely agree. The EFL is far too high, and access to the capital markets will provide the Post Office with precisely the alternative facility that it needs.

The anxieties expressed by Opposition Members are reflected in the printed postcards that many hon. Members will have received from both Post Office employees and users of local post offices. Most of those anxieties could be fully dealt with by a regulator. Such a regulator could set the ground rules for a competitive framework, protect the social needs that have been correctly emphasised, protect user interests, enforce universality and the uniform tariff and deal with the scare identified by the hon. Member for Vauxhall (Ms Hoey)—the possible ending of the returned-letter service.

Mr. Peter Ainsworth

Would not consumers' interests be better looked after under a regulator than they are now?

Mr. French

Yes, they would. The Post Office Users National Council currently does a very good job, but, although it tries to look after the consumer, its powers are ultimately limited. A regulator could ensure that the well-intentioned policies of such organisations were implemented: the legislation would give him teeth.

The Opposition have whipped up a good deal of anxiety. It is important for the future of the Post Office that they understand the arguments, which they have not done so far. As long as the current circumstances prevail, Royal Mail in particular is destined to lose business, and also to lose the opportunity to play its part in what could be an exciting expansion of the global market place.

The more far-sighted postal authorities see their opportunities to claim a slice of the new, larger cake. They perceive not only the possibilities for the domestic markets, but the possibility of co-operation between Post Offices in different countries to develop their businesses jointly. The chief executive of our Post Office has a very enlightened approach, but so have others.

Theo Jongsma, managing director of PTT Post International, said in London on 21 June: I support the privatisation of postal companies worldwide. He did not just want privatisation for Holland; he saw its merits generally. He continued: The Dutch experience has been and will continue to be a success. I sincerely hope that other governments will give their postal companies the opportunity to develop as normal businesses, in a competitive environment. The Dutch post office, however, is not alone. Also on 21 June and also in London, Dr. Klaus Zumwinkel, chief executive officer of PostDienst in Germany, said: There is a clear international trend towards liberalisation, deregulation and privatisation. No country can avoid this trend. The plan to convert the 3 Deutsche Bundespost companies into stock corporations is the only correct and viable approach to take. The same philosophy is embraced in Sweden. Since 1985, Sweden Post has been able to make free use of its profits and has had full power over its investment decisions. It is not yet a private company, but the pronouncements of its chief executive make it clear that it is destined to be one in the not too distant future.

I believe that the future of our postal services will involve the emergence of a few global postal operators with a command of both national and international opportunities, and a command of written and electronic information and goods such as we have not seen before. There will be vigorous competition, but the strong operators will do extremely well: it is therefore vital for Royal Mail to be there, among the leaders.

Let me return to the point at which I began. I have no doubt that the jobs of my local postal workers in the sorting office in Eastern avenue in Gloucester—and those in other sorting offices throughout the country, as well as in sub-post offices—will be safest if the opportunity for change is embraced, and Royal Mail becomes the world player that it should be. Jobs will be more secure, and employees will share in the growth of the business.

6.58 pm

Ms Ann Coffey (Stockport)

Although it identifies three possible options for the future of Royal Mail and Parcelforce, the Green Paper on the future of postal services effectively dismisses two of them out of hand. The Government are clearly batting for only one, and will spend the next three months trying to sell it to the public—for they are well aware that the public do not favour any kind of privatisation of the Post Office, and are very concerned about the current proposals.

One of the options dismissed by the Government was 100 per cent. privatisation, although they were enthusiastic about it. Having heard a couple of Conservative speeches today, I can see that there is a good deal of support for it within the party; the Green Paper, however, commented: many people prefer a closer link between Government and Royal Mail than this would provide". In other words, the Government have recognised that the public will not tolerate 100 per cent. privatisation. Perhaps that is because the public are not so impressed with its consequences. The comments of my constituents about the privatisation of our existing public utilities are mainly about the size of the chairmen's salaries and the problems of job losses among ordinary employees.

The Government also dismiss out of hand the retention of the Post Office in the public sector, while giving it greater commercial freedom. In case somebody stands up to ask what I mean by that, I refer them to the Government's option, which makes several suggestions about how that may happen.

The Government have three principal arguments against that option: first, that, as a publicly owned company, the Post Office would be protected from failure. Most people in the country do not want to see the Post Office fail and that option would be positive rather than negative. Secondly, they say that it would be underwritten by taxpayers, but the Post Office has made a considerable profit for a number of years, which has been very beneficial to taxpayers in the country by helping to finance other public services such as health and education.

Thirdly, the Government say that, as a public company competing in the market, it would distort the market and would become a soft option for private finance. Surely the water, gas and electricity companies and British Telecom are effectively private monopolies. That is why they attract such a good level of investment, because large investors see them as low risk.

The option that the Government are trying to sell is that of retaining 49 per cent. of the shares in the Post Office, so that they would be a passive partner, while selling off 51 per cent. of the shares. I am sure that, if they did that, like the gas, electricity and water companies, it would also be seen as attractive to private finance.

Whether it would meet the Government's criteria for attracting private finance that it should be seen as a high-risk business is very doubtful, because I am sure that all private investors would be attracted if 49 per cent. of the Post Office is publicly underwritten by the Government. Therefore, as one of my hon. Friends said earlier, the notion that on the one hand there are privatised companies and on the other publicly owned companies, and that the finance attracted to each of them is different, is absolute nonsense.

One of the biggest selling points of the option that the Government have put forward is that the employees will have 10 per cent. of the shares. In fact, that is the only mention of the future of the employees in the whole Green Paper. The reality is that, in this country, private shareholders have diminished in the past 15 years of our share-owning democracy, and shares held by institutional investors, whose power is enormous, have increased as a percentage.

Companies' accountability to their individual shareholders is very small. If privatisation takes the proposed form, the accountability to those shareholders who are employees of the Post Office will be exactly the same as it is in other companies—a lot of shouting about it, but very little accountability. I cannot imagine the chairman of a future privatised Post Office ringing up to consult the local postman, who has a few hundred shares, about the commercial decisions about to be made, although I can imagine the chairman telephoning a large investor for consultation.

That is a very poor way in which to maintain the accountability of the Post Office to its employees. The Government may feel that that is a good selling point, but it is a sham, and it means very little. I am sure that many of the employees who will be offered 10 per cent. of the shares would willingly part with their shares to ensure that the Post Office remained in public ownership, because they feel that that would be the best way in which to ensure the protection of their jobs.

Privatisation will not protect employees from losing their jobs, nor will it increase their pay in real terms. We are talking about many employees—165,000 people are employed by the Post Office. One of the most powerful arguments for keeping the Post Office in public ownership is that, in the aftermath of privatisation, thousands of employees will lose their jobs—it may not happen the month after privatisation, or the month after that, but it will happen. Commercial pressure cannot consider job loss. The driving force is the demand of the market for short-term dividends, and that will be no different for a privatised post office.

The country cannot afford any more unemployment. We must consider ways in which to keep people employed, of employing more people and of not making people unemployed. If we do not, we will not have many customers or consumers left—people need money to consume—nor will we have money going into pension funds, or money to invest in industry; nor will we achieve the social order or the stability that we need.

The Government need to accept their wider responsibility to ensure that everyone has access to the wealth of the country through employment. To do that, they need to look at their role as a purchaser and their role as an owner of public companies and their role in every single Department.

The Government also need to consider the job implications of their policies, as well as the commercial interests about which we have heard a lot tonight. The question should always be how we can consider employment, how can we create employment, how we can keep people in employment, as well as how we can make a business more efficient and more competitive, and how we can give value for money to customers. All those questions should be asked before any policy change, and they need to be asked when considering the future of the postal service.

There is only one answer to the present proposals: to retain the Post Office in the public sector, give it more commercial freedom and ensure that it continues to be a successful public enterprise, employing 165,000 people and much valued by the British public. That is what the public want, and I am sure that they will express it locally over the next three months. The big question, is will the Government listen?

7.6 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

A lot has been said in the debate, but may I first make it clear that, when my right hon. Friend the President of the Board of Trade made his announcement on 19 May, he said that three inviable functions would be kept in the Post Office organisation which would be laid down by statute? They are, first, maintenance of a nationwide letter and parcel service with a daily delivery to every address in the UK; secondly, a uniform and affordable structure of prices; and, thirdly, perhaps most importantly, a nationwide network of post offices.

As I have already made clear in an intervention, 19,000 out of the network of 20,000 sub-post offices are owned by private individuals, involving their own capital. I pay tribute to them and assure them that I do not believe that any of the proposals which I have seen mentioned in the Green Paper would in any way threaten the viability of their sub-post offices. There are other factors at work which may well threaten that viability and I shall address those in a moment.

I also pay tribute to my hon. Friend the Member for Gloucester (Mr. French). In particular, he mentioned his sorting office in the city of Gloucester. I very much hope that the viability of that sorting office will be maintained exactly as it is at present, because it is from there that the majority of my constituents' letters come.

Over past years, I have visited sorting offices in my constituency in Cirencester and Tewkesbury early in the morning and I have seen the valuable work done by the Post Office delivery men in those sorting offices. They then go out in all the worst weather. I pay tribute to them for that work and also for their valuable services in often providing companionship, advice, messages and so on when visiting the doorstep.

Mr. Hain

If the hon. Gentleman is paying such a generous tribute to his postmen and women, why does not he listen to them? None of them wants the privatisation which the Government are thrusting down their throats.

Mr. Clifton-Brown

As I shall make clear to the hon. Gentleman in a minute, the best way to secure the maximum employment in the Post Office is to ensure that it is profitable. As I shall make clear, it is only by some radical alteration to the existing structure that it will remain profitable and, above all, retain its market share. It is losing market share at the moment and we must do something about that, whatever solution we come up with.

Ms Estelle Morris (Birmingham, Yardley)

If the hon. Gentleman is so concerned about the loss of market share and about the need for the Post Office to be allowed to be more competitive, does he think that the Government have assisted that process by dilly-dallying for two years on the result of their review of the Post Office? How did that delay help the Post Office to prepare for increased competition?

Mr. Clifton-Brown

This is probably the most fundamental reorganisation of the Post Office for the past 150 years—since Rowland Hill invented the penny black. In such a fundamental reorganisation, we want to ensure that we get it absolutely right. That is why we are having this debate today and that is why my right hon. Friend the President of the Board of Trade and my other right hon. Friends are considering carefully what is the best course for the employees of the Post Office, above all, and for the maintenance of the profitability of that business.

One has only to look at the Opposition motion to see precisely what the hon. Member for Birmingham, Yardley (Ms Morris) is alluding to. The Labour party is not prepared to consider the future. We must consider the future, otherwise we shall find that the Post Office's business slowly gets smaller and smaller. We should contrast the motion with my right hon. Friends' amendment, which is positive; it suggests positive solutions and that is what I wish td address today.

We must recognise the changed environment in which we live. Customers no longer automatically go to the village shop. They may prefer to go instead to the large out-of-town superstore. When my constituents write to me saying that they are worried about the future of their rural sub-post office, my reply to them is, "If you are worried about its future viability, use it." It is up to the sub-post office in turn to provide the range of services that the customers want. I am delighted by some of my right hon. and hon. Friends' recent announcements about allowing a wider range of services to be sold in sub-post offices. I am particularly delighted by the announcement that a number of sub-post offices will be able to sell lottery tickets. That will considerably enhance their viability and profitability.

One must consider changing employment patterns. People now have less time to shop, so they increasingly look towards convenience shopping—towards electronic shopping—and that trend will continue. As consumers rapidly adopt the new technology, they will, if the sub-post offices do not provide that range of services, use them less. Apart from adapting to changing consumer patterns, the Post Office will need to adapt to changing trading conditions in three main ways. First, new forms of communication, such as fax and electronic mail, are increasingly emerging. The electronic data exchange market is growing by 20 per cent. annually. Television licences, for example, may now be paid for by direct debit. The fax market is growing by 30 per cent. The scope for expansion in that sector is huge and could wipe out much of the current letter business within a comparatively short time.

Secondly, competition from overseas post offices as the point of posting for bulk mail is increasing. As my hon. Friend the Member for Gloucester made clear, I have a company in my constituency with a large mail delivery which made a contract with the Dutch post office. It sent all its magazines to the Dutch post offices, which in turn contracted the magazines back to our own Post Office. The organisation making the profit was the Dutch post office and our own Royal Mail was left with the fag-end of the business. It had to make the daily deliveries and the charge for that was little above the cost price. We must respond to competition from overseas.

Thirdly, increasingly there is a trend towards contracting out and franchising ancillary services that the Royal Mail would be well placed to provide. Let us consider the competition. Let us consider the express deliveries around the country for bulk mail and parcels which are springing up all over the place. How can the Royal Mail respond to the challenges when it has to go to the Treasury every five minutes to ask for permission to invest in more facilities? In those circumstances, how could any commercial business succeed in the modern world?

As my hon. Friend the Member for Gloucester said, when the Dutch telecommunications business was privatised, one of the first things that it did was to make a joint venture deal with the huge American corporation AT and T to enable it to have access to the huge capital investment and the huge technology that would be required in that fast-changing business. As we shall see, the electronic mail business will change just as fast.

Mr. Gordon Prentice (Pendle)

Will the hon. Gentleman tell the House precisely when the Dutch post office was privatised?

Mr. Clifton-Brown

The first tranche of the Dutch post office privatisation took place in May.

Hon. Members

No.

Mr. Peter Ainsworth

It was 13 June this year.

Mr. Clifton-Brown

I have a little bit of extra knowledge from behind me. I am told that the exact answer is 13 June this year.

Mr. Prentice

Is it not the case that the Dutch Government kept 51 per cent. of the shares? Is that not, therefore, a perverse definition of privatisation? The Government hold the majority shareholding.

Mr. Clifton-Brown

I was coming to that very point. I will deal with it; it is important and I should like to illustrate it a little later.

One option is to give the Post Office much greater freedom to trade commercially while still remaining in the public sector. Many hon. Members, including the hon. Member for Livingston (Mr. Cook), have said that the Post Office would not succeed in the commercial world. Three options are proposed in the Green Paper. The first is some form of greater freedom in the public sector, whatever that means. No one has yet been able to tell us whether that would mean that the Post Office would not have to apply to the Treasury every five minutes and that it would be given increasing freedom to run its business. What about the external finance limit of £230 million? It has gone up four times since 1992. How would we deal with the increasing difficulty of the Post Office being in the public sector? I do not think that that is a realistic option.

The second option in the Green Paper is much more realistic. It is that 51 per cent. of the Post Office should be privatised. That would create a partnership between the private sector, the employees, above all, and the public sector. That seems a sensible way to go forward. In the other privatisations, City investors have been a little slow to realise the fundamental change in businesses that have been in the public sector for so long. It seems eminently sensible to let part of the business be sold off to the private sector and to prove that it can be run successfully in the private sector.

In response to the hon. Member for Pendle (Mr. Prentice), I say that I see no reason why, as in the case of British Telecom, we should not sell further tranches. As he knows, each time we had a privatisation of British Telecom—BT one, BT two and BT three—the share price increased because potential investors could see that the business had a tremendous future in the private sector and that it was becoming more successful.

The Government are eminently sensible not to go for the third option of a 100 per cent. sell-off in one go, although I must say that my personal preference would be to sell off the Post Office in one go and to let the Post Office management have complete commercial freedom. Why on earth should they not have that freedom, as has been mentioned by other speakers? As the Green Paper makes perfectly clear, the regulator's functions will be enshrined in statute. We are discovering in other previously privatised industries—water and electricity—how the regulator should function.

Opposition Members have spoken of the excess profits, as they put it, made by the water industry. If the industry did not make profits, it would not have the money for the £27 billion of investment over the next 10 years. Opposition Members do not seem to want an improved water system. My constituents want ever better water quality and they want money to be put into better water services. If those companies do not make a profit, where would the money come from? That is part of the problem about the Opposition's policy—[Interruption.] The answer is always the taxpayer.

What has happened to those businesses in the past? As we have heard, between 1976 and 1978, investment in the Post Office fell by a half and the same thing happened in the water industry and in the telecommunications industry. Why was it that up to the privatisation virtually every telephone box one went to was out of order and yet today 80 per cent. of them are in good working order and are clean? It is because British Telecom is making profits and investing them to provide an ever better service. There is no reason why the Post Office, minus the counter services, should not do exactly the same.

That is the way forward. We must also make sure that the regulator has all the statutory teeth that he needs. No doubt, night after night in Committee we will debate that very point. I want the regulator to have statutory teeth so that my constituents and those of Opposition Members, who have protested so much tonight, can enjoy the benefits to be gained from the Post Office providing a proper service, at a realistic price, across the country. That is best delivered by transferring the Post Office to the private sector, where it will make a profitable return. [Interruption.] The Opposition are obviously trying to make sure that I am truly put off my stride. They obviously do not like what I am saying.

Mr. Purchase

Is the hon. Gentleman in his stride?

Mr. Clifton-Brown

I will happily give way to the hon. Gentleman.

Mr. Purchase

We need some explanation of one small point that you made earlier. You said that the Government were sensible not to sell off the entire shooting match in one go, but, seconds later, you declared that that would be the best idea.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. I am afraid that the Chair is unable to explain anything to the hon. Member for Wolverhampton, North-East (Mr. Purchase). He should refer to the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown), not to the Chair. He should not use the word "you".

Mr. Clifton-Brown

I am grateful for your little bit of protection, Mr. Deputy Speaker, but I was about to deal with the hon. Gentleman. He obviously was not listening to what I had to say, because, although my personal preference is for a 100 per cent. sell-off, I see the merits of a partial sell-off of between 49 and 51 per cent of the business. That would make a lot of sense from the taxpayer's point of view.

As I said earlier, the Government had considerable success in selling off tranches of BT and I am sure that the same thing will happen with the Post Office. From the point of view of business development, however, the commercial freedom that an immediate 100 per cent. sell-off would give to the Post Office would be of considerable benefit to it. I hope that I have managed to explain that difference to the hon. Member for Wolverhampton, North-East. It takes a little understanding and I appreciate that he is a little bit slow to appreciate such matters.

The chief executive of the Post Office, Bill Cockburn, summed up the entire debate by saying: I have had to say quite bluntly recently that, without commercial freedom, we face an increasingly bleak future. Loss of business to the competition, from overseas postal administrations and the use of new technology, could mean both significant job losses and post office closures. That just about sums it up.

The Labour party's motion advocates doing nothing in the hope that everything will be all right. That simply is not an option. The Opposition are burying their heads in the sand, but the Conservative Government have proposed realistic options in the Green Paper. The options will be thoroughly discussed and considered by my right hon. Friend the Minister. I look forward to coming back to the House in the autumn to debate this matter and to progress to selling off 49 per cent. of the Post Office's business. I look forward to that business going from strength to strength in the private sector.

7.23 pm

Ms Estelle Morris (Birmingham, Yardley)

Whatever our views about the future of the Post Office, hon. Members have a common starting point: there is universal agreement that the Post Office is a success story. Whether one considers the profits that it has made, its efficiency, its popularity or its social worth, the Post Office comes out with credit. No one has sought to advance any other view of the Post Office. We need to remember that all that has been achieved with a Post Office firmly rooted in the public sector.

The Post Office has already faced change. Anyone who goes around a sorting office will appreciate what it has had to do to mechanise. In recent years it has also restructured its work force. It has already adjusted to changing patterns of communications not only in this country but throughout Europe and the rest of the world.

At the very same time as the Post Office has coped with adjusting to meet all those changes, it has increased its profits, kept its prices down and helped, in no small measure, to pay off the Government debt. From all the evidence of what has happened in the Post Office so far, there must be a predisposition in favour of our leaving it in the public sector.

We are now told, however, that the Post Office faces a new threat of increased competition. Because of that, we are told that, for the first time in 150 years, the Post Office will no longer be able to cope with that competition unless it moves into the private sector. Despite all the adjustments that it has made, the mechanisation that it has introduced and the fact that the work force have adapted to new work practices, we are told that, because of that threat of competition, the Post Office can no longer cope in the public sector. Frankly, I do not believe that. I do not believe that that obstacle can be overcome only by a private company and I do not believe that giving the Post Office commercial freedom is the reason behind the privatisation proposal in the Green Paper.

Let us look at the Government's record in supporting the Post Office in the two years since the general election. If Ministers are so concerned that the, Post Office should be able to meet new challenges, why have they done so little to help? Why have the Government left Parcelforce dangling, uncertain of its future, for two years? Why have they taken just under two years to publish the results of the Post Office review? If the threat of competition was so great, why did the Government cut investment in the Post Office in last year's public sector round? Why did they double the external financing limit in a year and treble it in three years?

The Government have cut investment while arbitrarily increasing their take of the Post Office's profits. They also shelved a review because of political shenanigans in the Conservative party. Those are more the actions of a Government concerned with securing their own future than the actions of a Government concerned with securing the future of the Post Office. Given what the Government have done for the Post Office in the past two years, one must conclude that their motives on the future ownership of the Post Office cannot be trusted. They are based on a different agenda.

I do not believe that privatisation is necessary to give the Post Office the freedom which it wants and which the Opposition acknowledge that it needs. I acknowledge that privatisation could give it the freedom that it needs, but the Opposition believe that the cost entailed is not worth paying.

The Green Paper acknowledges that, for centuries, the Post Office has made a vital contribution to our national life. It also talks about the Post Office being a unifying force of the nation. That is what is at risk, unless the Post Office stays in the public sector. Can we really see the private sector companies, shareholders or boards agreeing to keep open 5,000 small sub-post offices that represent only 1 per cent. of the company's business? Can we imagine a resolution at the annual meeting of Royal Mail plc agreeing to keep prices 13 per cent. below the rate of inflation for a decade? That will not happen. That is not what motivates a private company. Such agreements will not be reached if the Post Office is removed from the public sector.

What we have in the Post Office is not repeated anywhere else in British industry: it is a special mix of public service ethos with a commercially successful track record. That combination must be addressed successfully in any review of the Post Office.

In the private sector, the pressure to increase dividends and top managers' salaries, as well as to cut out economically unviable parts of the business, will dominate. That is, by nature, the way in which shareholders and private sector companies work. Hon. Members have already mentioned what has happened in the water companies and the electricity boards. Tory Members may talk about guidelines which mean that the Post Office should not do that, but the Government cannot give a guarantee that goes beyond so many years, and they will be under pressure for the regulatory body to limit its restrictions on Post Office activities. The definition of a company operating in the private sector is that it has the freedom to cut out parts which are not economically viable. I do not believe that any statutory measures will stop the privatised Post Office doing that.

The Green Paper acknowledges that people are the Post Office's most important asset. Yet one of the main areas of anxiety and concern among Post Office staff—that of Post Office pensions—is dismissed in only three lines at the bottom of page 26 of the Green Paper. In those three lines, Post Office staff are assured that the Government will safeguard pension rights. That assurance might be welcome—indeed, I welcome it—but it does not go far enough and it is not sufficient to allay the justifiable fears of Post Office workers.

Post Office staff want to know what effect the envisaged changes in the Post Office structure will have on the now closed Post Office superannuation scheme and the Post Office pension scheme. Given assets of £10 billion and £435 million respectively and surpluses in both the closed and open schemes, Post Office employees want to know what access the board of a privatised Royal Mail will have to those funds. With Post Office employees paying 6 per cent. of their salaries in pension contributions, that is a question to which they are entitled to know the answer. Again, we wish to know how Postel, which has proved to be an effective investment arm for both the pension schemes, is likely to be affected by any changed structure in the Post Office.

There are 140,000 retired pensioners in the Post Office superannuation scheme and 120,000 still contributing to that scheme. Who will administer that closed pension fund in future if privatisation goes ahead? One of the major anxieties for everyone in the Post Office is whether the Government will give a pledge that the pensions for both current and new employees will continue to be index-linked under a privatised Royal Mail. The Government have not announced how the assets and surpluses of the Post Office superannuation scheme and the Post Office pension scheme will be divided between a privatised Royal Mail, Parcelforce and Post Office Counters.

Post Office workers have worked in an atmosphere of uncertainty for the past two years, and that is long enough. I invite the Government to give firm assurances on the specific questions that I have raised about the future of the Post Office pension schemes. I look forward to the Minister's response in that direction.

The Government will find themselves in a small minority when the results of the consultation exercise are made known at the end of September. The people have a stake in their Post Office. They have a right to be heard; more than that, they have a right to see their views reflected in any legislation that follows the consultation process. I believe that they, like us, will say that the future of their Post Office, which has served them well for more than 150 years, should be in the public sector, marrying the two ingredients of a successful and efficient public service and a profitable and popular commercial enterprise.

7.33 pm

Mr. Peter Ainsworth (Surrey, East)

This is an important debate because we are discussing not only an aspect of national life with which all of us are familiar —I know that my constituents in East Surrey are familiar with the Post Office because they use it regularly to communicate with their Member of Parliament—but two important and successful British businesses: a communications business and a retail business. We are talking about how we in Parliament can best help them to succeed.

I agree with the hon. Member for Birmingham, Yardley (Ms Morris) that we start with much common ground. No one would deny that the Post Office has been successful in the past; it incorporates not only one of our greatest distribution businesses but one of the greatest distribution businesses in the world. It has not only consistently improved its service delivery over the years; it has managed to reduce prices in real terms and deliver a substantial stream of money—about £1 billion in real terms over the past 10 years—to the Treasury.

Equally, few people would deny that there are mounting and real pressures on the Post Office's ability to continue to succeed in the way that it has. For Royal Mail, the challenge comes principally, as we have heard, from the growth in telecommunications, faxes—which are growing at some 30 per cent. a year—and electronic data exchange. They all threaten the Royal Mail's largest and most profitable markets. My hon. Friend the Member for Gloucester (Mr. French) mentioned the current British Telecom advertising campaign. On my way here today, I drove past a poster which said: Enjoy a 1st class conversation for less than a 2nd class stamp". No further indication of competition is needed; that advertisement sums it up squarely. We are talking about a global communication market; we are not simply talking about the Post Office and Postman Pat, however important he may be.

If the Royal Mail is to maintain and improve its position within the communications industry, and if it is to participate in the activities that my hon. Friends have talked about, such as the international data highways of the future, it will require a substantial level of capital investment.

The Royal Mail has great advantages, as well as threats,, to face. It has a superb national delivery network; it has a reputation for excellence in service delivery; and it has a name that is recognised throughout the world.

For Post Office Counters, the challenge comes principally from a decline in its traditional markets, which has come about as a result of changing patterns of behaviour and the exercise of consumer choice. Ninety per cent. of Post Office Counters business is from as few as eight clients—and most significant among them is the Benefits Agency. We must consider the future of Post Office Counters in the light of the fact that, for example, 40 per cent. of new pensioners already have their benefit sent direct to their bank. We must also consider it in the light of the developing interest in direct debit and the fact—[Interruption.] There is that fly again. I do not know what the Official Report will make of that. Stamps are now widely available from outlets other than post offices. I think that the fly is trying to deliver a message to the Chamber.

The Post Office Counters market is undoubtedly facing a threat as well. But like Royal Mail, it, too, has advantages. For example, it has 20,000 outlets. I think that that makes it the largest retail network in Europe. It has unparalleled penetration not only in cities but in town centres and rural areas. It is our job to help to build on those strengths to make it a truly successful business for the long term.

I freely admit that these are not particularly original observations. The same observations have been made by the Post Office, my right hon. Friend the Minister, my right hon. Friend the President of the Board of Trade, the Post Office National Users Council, the Mail Users Association, the Select Committee, the National Federation of Sub Postmasters and even the Opposition parties. All have observed the same trends, the same threats, the same challenges and the same opportunities, and all have been led to the same question: given that the status quo is not an option, how do we best enable the Post Office to build on its advantages and meet the challenges? Of course, this is where the differences begin in the Chamber.

The Government have clearly considered the matter with great care. They have listened to representations before publishing the Green Paper. They have listened to the Post Office management, who have stressed that in their view the Post Office needs the freedom to raise capital, to invest with confidence, to engage in joint ventures, to participate in international markets and to develop new markets and technologies.

Now the Government have produced their Green Paper, and with it a recommendation which—not just in my view but, far more important, the view of the Post Office—represents the best possible way forward. I believe that the Government's preferred choice will satisfy the Royal Mail's objectives, which I have outlined; in addition, it will have the benefit of enabling the work force and sub-postmasters to participate in the ownership of the company. Our preferred choice will build in greater consumer safeguards by way of regulation. It recognises the great public interest in the network of post offices, and it guarantees core functions in the service—daily delivery to all parts of the country and universal pricing.

The Green Paper is a consultative document; it invites an informed debate. Yet what is the response from Opposition Members? I fear that, taking their cue from the Union of Communication Workers and rooting their position in a blind attachment to state control, they merely offer a diatribe of scaremongering and a rather facile political polemic. They talk about job losses, post office closures and rising prices. They talk about failure—all this despite the evidence that they were wrong about BT, wrong about British Airways, wrong about gas and wrong about steel. Despite all that privatisation has achieved for taxpayers, businesses and consumers in the past decade, Opposition Members remain implacably ideologically opposed to it.

While the Union of Communication Workers rushes off to print two million leaflets and God knows how many stickers, the Labour party offers, in time honoured cliché, to turn the summer heat on to the Government by taking our campaign into the rural shires who have most to lose from the privatisation of the Post Office". I wish the Opposition much joy on their rural ride. They tend to get a little lost in the shires.

It is an inescapable fact that, just as enabling post offices to increase substantially the range of goods and services that they can offer is the most certain way to ensure their success, so privatisation offers the best way forward for protecting jobs in, and enabling the future success of, the Royal Mail.

Opposition Members need to understand, when launching the campaign to which the hon. Member for Vauxhall (Ms Hoey) referred, that it will be a campaign against the Post Office, against its workers and against its future prosperity. When they return from the rural shires, accompanied by Sancho Panza in the shape of the Liberal Democrats, I have no doubt that they will continue to peddle the option about which we have heard so much today and which Opposition Members claim will achieve all that the Royal Mail wants and needs. In truth it will do nothing of the kind.

At least this time the Opposition parties have been able to face up to the problem, but unfortunately ideology has forced them to shy away from the solution. Curiously, there is one aspect of Opposition policy about which they have been rather reticent. We have not heard what that policy would be in the event of privatisation taking place. I invite the Opposition spokesman to confirm now that such is their commitment to the ideology of state control, so deeply embedded in the Opposition motion tonight, that they would not hesitate to renationalise the Post Office in the unlikely event of a Labour Government.

Mr. Cousins

The hon. Gentleman was presumably here at the beginning of the debate to hear my hon. Friend the Member for Livingston (Mr. Cook) make it clear that it would be our intention if we returned to power, and if by some mischance the option that the Government appeared to support had been implemented, to restore public ownership.

Mr. Ainsworth

I am grateful for that interesting reply. It differs markedly from my recollection of what the hon. Member for Livingston said. The Labour party appears to be divided, but it is encouraging to see that the clause 4 adherents in the Labour party are alive and well and sitting on the Front Bench. I have no doubt that the hon. Gentleman's answer will be noted with considerable interest outside the Chamber.

The nub of this debate concerns whether the Royal Mail can meet the challenges ahead while still in the public sector. The Opposition parties maintain that it can, but there are three obstacles to that. We have heard about them before, and I have yet to hear any convincing arguments that would remove those obstacles.

Mr. Clapham

Has the hon. Gentleman had a look at the Trade and Industry Select Committee report on the future of the Post Office, published in March of this year? If he has read through the notes of evidence, he will have seen that the management of the Post Office stated that they would be well suited with the option allowing commercialisation of the Post Office, so that they would be freed from the external financing limits and able to compete on a level playing ground with the post offices of Sweden, France and Germany, which are also state plcs.

Mr. Ainsworth

I am glad that the hon. Gentleman has referred to that report, which I read with considerable interest. He will have noticed, of course, that since publication of the Green Paper the Post Office management have made it abundantly clear that they do not favour remaining within state control, for the good reasons stated in the Green Paper itself.

As my hon. Friends the Members for Gloucester and for Leeds, North-West (Dr. Hampson) said, the Royal Mail's ability to invest in new technology and in the development of new markets has been and is being hindered by Treasury restraint. As long as the Royal Mail remains in the public sector it will effectively be forced to compete in the general public expenditure survey, a fact clearly reflected in the rising EFL at a time of public expenditure restraint and of the application of the Treasury's blue pencil to the spending plans submitted by the management of the Post Office.

The Minister of State gave several examples of the sort of problems that arose for publicly controlled companies under the Labour Government, and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) dwelt on the same subject. It is essentially a simple idea: as long as the Royal Mail is owned by the state, the state will have other spending priorities and the Royal Mail will suffer as a result.

I should like to quote from the Select Committee report, which states the chief executive of the Post Office said that above all what was needed was that the Post Office should be free to raise money without it being in the PSBR and free to make investments without having to consult the Treasury every five minutes. We support those sentiments. The hon. Member for Yardley may disagree, but it is frankly naive to think that those objectives can be met while the Royal Mail remains under state control.

Secondly, as we have discussed, competition with the private sector must operate fairly. I know that that is a difficult issue—the hon. Member for Gordon (Mr. Bruce) has said that it is by no means simple—but how can it possibly be fair to have a system whereby a publicly owned Post Office, backed by the taxpayer, competes with private companies for markets and capital? That simply is not fair.

The third problem with the Opposition's contention today is that although, as I think most people will agree, the future of Royal Mail lies in exciting new markets, if the company is to become a significant player in new markets for electronic information transfer, substantial capital investment will be required, and one is entitled to ask why the taxpayer should take risks on that capital investment which are rightly the business of shareholders and financial professionals.

The Green Paper says that, if the Post Office remains in the public sector, it may well be subject to slow decline, and we simply cannot afford to waste the opportunities that now exist. The Green Paper's preferred option makes clear a commitment to universal pricing and delivery; it reinforces the position of Post Office Counters; it enables the business to expand and develop new markets; it recognises the social dimension of the Post Office and its services. It commits the Government to substantial continued investment in two businesses, which would be newly freed to succeed.

The competitiveness White Paper published by my right hon. Friend the President of the Board of Trade a few weeks ago discusses how the Government can best help British businesses: Often the Government can help most by getting out of the way. That is the case here.

Opposition Members claim to speak for the Post Office. They do not. They speak for the old socialist belief in state control. We have heard that from the Opposition Front Bench this afternoon. They have learnt nothing; they would do it all again.

The Post Office, in any case, can speak for itself. It did so when the Green Paper was published. The headlines of the Post Office press release will suffice: Partnership Option Best—' A Real Winner for Britain' Post Office Urges Public Support". It is a matter for great sadness that the Post Office will receive no support from the Opposition parties who cynically exploit the anxieties of the vulnerable for political gain at the expense of British business.

7.52 pm

Mr. Ken Purchase (Wolverhampton, North-East)

I have heard today a great deal of justified congratulation of the Post Office on the excellent way in which it runs its business and services—the public services that it has provided for 150 years.

I add to those congratulations by saying—no doubt hon. Members will want to join me in saying it—that during the summer we shall expect our huge bundles of mail to be delivered to our offices and homes, with ever heavier sacks of mail arriving on the shoulder of, in my case, the postwoman, and I greatly value the service that she provides. Hon. Members will receive the same quality of service, whether they represent a constituency in the far north of Scotland or the far south-west of England. That service is guaranteed: it will happen—we need not worry about it. [Interruption.] I am being prompted from the wings to say that that guaranteed service will also be provided in Wales; I am happy to add the Welsh contingent to my thanks and congratulations.

Some years ago, my wife was a postmistress. We ran a small post office in an inner-city area with predominantly 19th century housing built by brewers and other organisations. The population were elderly and relied on the post office for the services that they needed in terms of pensions and other bits and pieces. They valued the commercial side, which my wife ran: envelopes, writing pads, sweets and all the things that we generally now take for granted in a sub-post office, all of which help to make the whole business a viable proposition for someone to run.

Earlier, there was discussion about whether there was any cross-subsidy between one part of the Post Office and another. An accountant could probably demonstrate either case. However, it is obvious to me that the salary of a postmaster or postmistress in a sub-post office in a declining area—an office that is visited by fewer and fewer people, who nevertheless rely on it—could not be met from the volume of business that is transacted. None the less, at present that sub-post office is kept alive because the entire business is able to sustain it from its overall profitability. That is an important point which ought not to slip off the agenda too quickly.

Although there is a right and proper emphasis and a campaign about the problems of losing rural Post Office services, the needs of the inner cities are no less acute. I could go further and say that, due to the nature of inner-city communities, the density of the sub-post office network is vital to give people the peace of mind and confidence to know that they can walk relatively short distances, without needing to rely on any other form of transport, to obtain their pensions, their child allowances and everything else that is available at the Post Office.

Earlier we heard it said that if, as a result of competition, our sub-post offices were to lose 10 per cent. of their business, many of the sub-post offices would quickly slip into a loss-making position. If their profitability were the sole criterion for whether they should continue, many sub-post offices would be closed in the areas that I have described and I am sure that the same would be true in the rural areas.

Where could that competition come from? Frankly, if we leave this successful organisation as it is, but accept the changing technology, changing needs and new developments, and allow the Post Office the freedom to deal with those in a proper way, with sound management and good financial policies, there is no problem with competition—not domestically, at least. A strong domestic position will better equip our Post Office to deal with the increasingly international side of its business. It is true today, as it always was, that a strong home market is vital to enable any industry or service to develop worldwide competitive strengths. One needs that base in one's own domain.

We are in danger of offering, to anyone who cares to come along, a proposition that they can set up a postal service. I know that it will be said that we shall have a minimum postal charge and therefore the opportunities will not arise, but they will. It will not be long before little local services develop, taking letters and delivering them. Very soon, it will become almost the norm to do it from one end of the place to the other, and soon the Government will be asking, "Is there much point in maintaining the artificial level that we have imposed? We might as well let it go."

Some of us have not forgotten the lesson of Sunday trading. It took the large national companies to break the law, disregard the law, pay no attention to the law, and be rewarded by the Government for having so done. I obviously excuse the Minister for Industry, who was in a different camp on that occasion. There is a possibility that this will develop in the same way because of the idea that it is impossible to control the popular demand that would arise for such a service. We should keep that in mind, especially in the light of our recent debate on Sunday trading and what happens to law breakers in that regard.

I do not necessarily say that it is impossible for private enterprise to run a network of sub-post offices and post offices—clearly, it is possible with full and proper regulation—but the Government's record is to reduce rather than introduce control of these matters. I am sure that they would let it slip as soon as pressure was brought to bear on them. If that is the case, why should we change a winning team? As I have said, the Post Office needs to take on board developments in this country and worldwide.

With regard to inner-city sub-post offices, the Green Paper refers to the new challenges mentioned by a number of hon. Members, but there are also some old needs in inner cities. On a downward slope when demand is decreasing, profit can still be made from providing a good service. Decreased demand does not mean that the service cannot be organised properly and profitably and make a contribution. To do that, one simply gathers up the available business and provides it at a proper price. That would protect the network of inner-city post offices.

There are old-fashioned needs, and old-fashioned common sense ought to dictate that great care needs to be exercised before accepting the Government's view of privatisation by selling 51 per cent. One Conservative Member said that his preference would be to get rid of the lot as quickly as possible, but he failed to explain the sense of the Government's desire to slice it up bit by bit. No doubt he was thinking of the next election and wondering how the Government might best sell off the Post Office, get in some money and give it away as another tax handout. That is exactly what they are thinking, and much of what drives the White Paper could be understood by looking at it in that way. In the end, we come down to ideology.

Mr. Clifton-Brown

I am listening carefully to the hon. Gentleman. Is he suggesting that we have privatised about 27 businesses since 1979 merely to win four elections which we won so successfully? Those businesses now have a change of culture and operate successfully in the private sector.

Mr. Purchase

They have certainly had a change of culture. Of that there is no doubt: indeed, additional evidence arrived this very day on the front page of the Financial Times for all who cared to read it. The hon. Gentleman looks away because he cannot bear to hear the truth. The Financial Times states that the electricity companies, or rather their chief executives and main directors, have had a massive bonanza. It is simply a case of changing the culture so that public money can be used to line private pockets. That is the nature of the change of culture in what were public services.

Let us reflect on this great change in, for instance, British Telecom. I agree that, comparatively speaking, the telephone service is now cheaper, but by golly why should not it be? There have been worldwide advances in technology. Is the hon. Gentleman or any of his colleagues saying that those changes would not have happened—

Mr. Sainsbury

Yes.

Mr. Purchase

That is nonsensical. The fact that BT was owned by the state would not have pre vented worldwide technological advance from being taken on by any sensible company or any commercial undertaking. Our model of commercialisation fits well with the ability to take on new technology and for services to develop and improve and reach more people.

The Minister turned the truth on its head when he said that Labour believed that everything private is bad and everything public is good. Almost the whole of the Labour party has spent most of its working life in private industry and enterprise and we do not believe that at all. That whole concept is nonsense and the Government must adopt a more sensible approach. They cannot continue with the idiotic ideology as though it had not failed when it has manifestly done so.

People rightly believe that they are paying more for poorer quality water. The water companies may say that the chemical mix is correct, but we know that the water that comes out of the tap is abominable. As for investment, instead of going to their shareholders for money for long-term investment, which is then paid off by revenue, the private companies immediately impose a price rise on the general public who are absolutely held by those monopolies. That is how investment is financed, while at the same time the companies increase dividends well beyond what could normally be expected in any other commercial organisation.

We do not have a uniform view that this is good and that is bad. We have to look at what has happened. There has been some good and some bad in the industries that the Government have privatised. The Post Office is an excellent organisation which delivers a good service uniformly across our nation. It could compete internationally if the Government would give it the go-ahead on a commercial basis. Why are the Government obsessed with the ideology that everything in the public sector is bad and everything in the private sector is good?

We heard talk about how the Treasury determines everything. For goodness sake, the Government are in charge of it: they can decide the rules and what constitutes part of the public sector borrowing requirement and what does not—or perhaps the Minister can do it by himself. If the Government continue to box themselves into a corner of their own making, they cannot plead to the House, "How can the Post Office possibly prosper when it has to run to the Treasury every time it wants to invest two bob?" That can be turned round if there is a desire to take that utility out of the PSBR and give it commercial freedom, including the ability to raise money on the capital markets.

I hear calls of, "Unfair," but unfair to whom? The Green Paper tells us that at present what happens with regard to external financing limits and the contribution is similar to what happens to the dividends paid to shareholders. This is our business, our Post Office. Why should we not have the dividend, invest capital and take a long view as a community, collectively? The Post Office is a prime service industry. It does not have to be privatised in this way. It can serve the needs of our nation domestically and industrially.

Mr. Peter Ainsworth

The hon. Gentleman referred to a point that I made, but I am not sure that he fully understood it. The point about fair competition is, first, that it is good and, secondly, that it cannot exist where one of the competitors has behind it the full weight of the taxpayer. There can be no fair competition on that basis.

Mr. Purchase

That turns everything on its head. Any number of international and multinational conglomerates have such clout in the money markets that it is silly to talk that way about Britain, which probably has a gross domestic product smaller than the borrowing ability of some multinationals. [Interruption.] I do not have it wrong. It is barmy to say that we should not exercise our right collectively and as a state to borrow money to finance long-term investment in our industrial and service sectors. It is not me who has not understood; your side—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I am sorry to interrupt the hon. Gentleman when he is in full flow, but we do not normally use the words "you" and "your" in the Chamber.

Mr. Purchase

That is the second time I have been told that today, Mr. Deputy Speaker. I understand and I will do my best to refrain, notwithstanding the full flow.

It is right that collectively we should be able to raise money for long-term investment. It is Conservative Members who have not understood the important difference between borrowing for investment and borrowing to pay the dole. The Government are pouring money down a black hole with no chance of recovering it. They are financing unemployment, much of it the result of the so-called rationalisation of some of the former nationalised industries. That is why millions of people are claiming the dole instead of working.

We want the Post Office to be able to borrow for long-term ventures such as modernising, improving and spreading its service as widely as possible, thereby leading us to a springboard from which we can compete successfully on the international stage and win for Britain.

8.11 pm

Mrs. Angela Browning (Tiverton)

I have resisted the temptation to intervene in the speeches of Labour Members since the hon. Member for Vauxhall (Ms Hoey) so ungraciously refused to allow me to do so in her speech.

Some rather contradictory views have been expressed by Labour Members. They have said that, if Royal Mail is privatised, the price to the customer will be jacked up, but that private enterprise would undercut Royal Mail. The idea that any business would jack up its prices while competing with other companies that were reducing theirs does not sit well in the marketplace with which I am familiar.

The hon. Member for Wolverhampton, North-East (Mr. Purchase) disagreed with the Minister's assertion that, if British Telecom had remained in the public sector, it would not have reduced its prices or acknowledged advances in technology. The hon. Member for Birmingham, Yardley (Ms Morris) claimed that privatising Royal Mail would be bad because the only way to protect the 160,000 jobs involved was to keep it in the public sector. I am not sure whether the hon. Lady believes that British Telecom could have maintained its staffing strength while reducing its prices and acknowledging advances in technology—something that has been necessary throughout the world.

I represent a large rural constituency that covers some 650 square miles and has more than 70 post offices. I take a particular interest in, and have a particular concern for, the future of those post offices, the majority of which are sub-post offices. I have had regular meetings with the sub-postmasters in my constituency. Indeed, last September I invited them all to a meeting so that they could tell me how they saw the future and what they wanted for rural post offices in particular. I am pleased to say that 30 of them attended that meeting and I then fed back their views to my hon. Friends at the Department.

I must come to the defence of the Minister. Labour Members have accused him of dithering. We all want the process to be concluded because uncertainty is not a good thing, but my right hon. Friend has not been dithering. He has spent considerable time studying what happens in other countries—especially the Republic of Ireland, which uses the switch card to good effect in the payment of benefits. I was glad, therefore, to note in the Green Paper the Government's pledge of —130 million for the automation of benefit payments. If the system is similar to that in the Republic of Ireland, it will greatly benefit my rural post offices. When the sub-postmasters met me last September, they were anxious to point out that they wanted ways to generate income other than the opportunity to sell tangible goods.

Some of the sub-post offices in my constituency are very small and do not have the room to sell a large range of stationery, let alone stock the grocery items that are so often found in small post offices. Some of them are open only two or three half-days a week and are located in people's front rooms. Their ability to increase their income and the range of services that they offer to people in the villages is obviously extremely limited.

If small post offices were computerised and able to sell a range of additional services, the benefits would be most helpful. Ticketing and similar services that can easily be arranged through a computerised service would help them to broaden the range of services that they could offer. That would help people who live in rural communities.

I have read the Green Paper carefully and I shall discuss it at a meeting with sub-postmasters in my constituency before 30 September. Before I do so, however, I should like to ask my right hon. Friend some questions. There is some concern about the payment that sub-post offices receive from the Royal Mail. When my right hon. Friend replies to the debate, will he give an assurance that that payment will continue? It is an important part of their income.

As is made clear in the Green Paper, and as Ministers have said from the Dispatch Box and elsewhere, it is important to maintain the network of sub-post offices and the universal daily delivery of mail from Monday to Saturday, regardless of where people live. In rural areas, people often live at the end of lanes, so it is important to maintain the continuity of the daily post.

Had the hon. Member for Vauxhall allowed me to intervene when she was talking about a second delivery, I would have told her that rural areas have not had one for many years. I visited the modern sorting office in Exeter, which is in the constituency of my hon. Friend the Member for Exeter (Sir J. Hannam), but which also serves my rural constituency that surrounds Exeter. I was there during the late morning and early afternoon and I saw the amount of mail that was cleared. It is quite clear that Royal Mail is now able to deliver, in one delivery, the vast bulk of the mail that it receives in a 24-hour period. Raising problems about a second delivery is just a red herring. Rural areas get their post on time without the benefit of a second delivery. Indeed, in this day and age, a second delivery is a bit of a luxury, especially in view of the small amount of post waiting to be cleared in the sorting office in the late afternoon.

Mr. Hain

Will the hon. Lady give way?

Mrs. Browning

I would be tempted to do so, but the hon. Gentleman's colleagues did not extend that courtesy to me earlier.

The cross-subsidy is important for the network of sub-post offices and sub-postmasters in my constituency want some reassurance about that. As I have said, many of them have very small businesses and the amount of income they can generate, from Royal Mail and other sources, is limited.

I am convinced that the necessary guarantees will be provided, so I shall be happy to support the proposed Bill when it comes before the House. Obviously, I want to take the opportunity to respond in detail to the Green Paper and to sound out my sub-postmasters. The principle behind the Government's proposal—which is to maintain the network of sub-post offices in its present format but to increase the range of services that can be offered—is most welcome. My hon. Friends have demonstrated amply that, if Royal Mail is privatised as is suggested in the Green Paper, it has not only to defend its position in the marketplace, but to be given the opportunity to go out and compete in marketplaces around the world.

We have heard what happens in the commercial environment, particularly with direct bulk mail. I know of businesses in other parts of the world—America, for example—that send an enormous amount of direct mail into mainland Europe. They rarely use Royal Mail because other countries' services can undercut us yet, as we have heard tonight, the local postman and postmistress ends up putting it through a letter box or delivering it to a business. We are being used in a way which produces very little profit.

I received a letter from the Post Office—as I am sure did many hon. Members—outlining its concern at the way in which the volume of mail is growing. As a result of the growth in bulk mail, person-to-person mail is declining as a proportion of the gross mail handled by the Post Office. That is extremely worrying and, as we all know, once a business loses its market share and people build in brand loyalty with other service providers, it is difficult to break into those markets.

Royal Mail must be allowed to compete domestically and internationally. Associations that it may want to develop with printing companies and others who can deliver the complete package of services that people who send commercial mail want to purchase are important because that added value element will be extremely important.

In principle, I am happy to support the proposals that Ministers have outlined from the Dispatch Box. I obviously seek reassurance on the critical issues that affect people in rural areas, particularly in my constituency. I look forward to debating them fully and I hope that Ministers will take full account of the representations made to them in response to the Green Paper.

We have heard that, this summer, Labour party representatives plan to come into our rural areas. I hope that they wear good strong boots, as it is not as balmy an environment as they would wish. When they spread their scare stories in rural areas they will find people to be quite sensible. They will also find that the Liberal Democrats got there first as, for many months, the Liberal Democrats have been telling people in rural areas, by means of questionnaires and petitions, that they will lose their daily Royal Mail and the sub-post offices in their villages. I assume that the Labour party will follow them in that. They are past masters of such scare stories and I am sure that they will share their disgraceful tactics.

I hope that people will look at the facts and will not be gulled. The people who are gulled by scare stories are pensioners and disabled people who claim their benefits from local post offices and people who look forward to personal letters from relatives once a week or once a month.

The campaign is typical of what one might expect from Opposition parties, but I hope that it will be exposed for what it is—preying on the vulnerable and not a rational response.

Mr. Michael Connarty (Falkirk, East)

Will the hon. Lady give way?

Mrs. Browning

I am not giving way to any Opposition Members.

I sincerely hope that the British public, who will be the prey of the summer campaign, will demonstrate, as they have in the past, that the privatisations that the Government have introduced have not only been right, but have been in the public interest.

8.23 pm

Mr. Peter Hain (Neath)

The most striking thing about the Green Paper is that it is riddled with contradictions. The Government have stumbled into the proposal like a drunken sailor intoxicated by the privatisation dogma.

Three years ago, we had the citizens charter, with its proposals for deregulation and extra competition. We heard no more about that. Then, two years ago, the President of the Board of Trade announced the privatisation of Parcelforce in an almost instant fashion, without proper consultation, only to be dragged by his officials into considering an overall Post Office review a week later, once it had been pointed out to him that it was not as simple as he had thought. We have had deliberations on the proposals for two years and now the Government have come up with this hotch-potch.

I remind the Government that the well-worn procedure for dealing with drunken sailors is to throw them overboard. The former Under-Secretary of State, the hon. Member for Gainsborough and Horncastle (Mr. Leigh), lost his job as a result of the mania for Post Office privatisation, so which Minister will be next? I believe that, ultimately, the people will throw the Government overboard as a result of this privatisation. I mean no ill will towards you, Mr. Deputy Speaker, when I say that.

The first serious fault line in the Green Paper is the separation of Post Office Counters from the rest of the Post Office. No postal authority in the world operates a separate retail business, as the Government are proposing. Even the Dutch, who have been quoted every other minute by Government supporters in the debate, have made it clear that they oppose such a proposition.

At a conference in London on 21 and 22 June the managing director of the Dutch post office, Mr. Theo Jangsmon, said: I believe the separation of Counters from Royal Mail will hamper some service development". The chairman of the Post Office, the chief executive and the rest of the Post Office management whom the Government are praying in aid to support the privatisation proposals have argued strongly in evidence to the Select Committee on Trade and Industry and elsewhere for the business to be kept together.

The former chairman of the Post Office, Sir Ron Dearing, who has been significantly silent on the privatisation debate because one might surmise that he is opposed to it, argued the same thing—that the Post Office should be kept together—in a letter to staff in January 1987, as did the Post Office Users' National Council in a submission to the Government's own review.

Are they all wrong? Do the Government consider themselves the only party to the debate who are right? I do not think so; it is essential to keep all sections of the Post Office together, because there is a synergy between the different businesses.

There are 3,092 delivery offices and more than half—1690—are attached to local post offices. If those post offices are threatened, the delivery offices will be threatened as well. Equally, if the delivery offices are threatened with closure, as will increasingly happen under privatisation, the viability of local or sub-post offices will also be threatened.

Parcelforce is another example. When there is nobody at home, parcels are invariably returned not to the 137 parcel delivery offices—a small number, which is declining—but to one of two other places: either the 3,000 local letters delivery offices or the 20,000 local post offices. If Counters is separated from Parcelforce and the Royal Mail as an entirely separate institution in the public sector, there is no prospect of that synergy remaining, and that will threaten the Royal Mail and Counters.

There is also a tremendous danger of Counters being left as a rump service in the public sector, with no obligations and no commitments from its sister businesses dealing with letters or parcels to support it in any way. I am not suggesting that there is an overt accounting cross-subsidy; there clearly is not, but there is an organisational cross-subsidy that results from being part of the same post office.

If, in addition, as the Green Paper proposes, private parcels operators and postal operators are encouraged to use the Post Office network as suggested in the Green Paper, there will be even less incentive for the privatised Royal Mail to continue to support the public post offices in the way it does at the moment.

I speak only for myself in this regard and may be criticised by members of my Front Bench, but if the Government privatise the Post Office—something to which I am 100 per cent. opposed—they should keep the counter business with the Royal Mail. If they are hell-bent on privatisation, they should privatise the whole Post Office, and not break it up in the way proposed. If there is an end to any obligation on the part of Royal Mail and Parcelforce to maintain current inter-business charging arrangements, the Post Office's overall viability, and particularly that of the counters business, would be threatened.

At present, there is a considerable financial flow between different postal organisations. At the end of March 1994, counters recorded an income from the Royal Mail of £221 million, against expenditure of £51 million; and from Parcelforce, an income of £22 million against expenditure of £1 million—a net income of £191 million from both businesses.

If Royal Mail and Parcelforce choose other means of delivering the services for which they currently depend on Post Office Counters, the effect on its small profit margin will be catastrophic. The Government have completely ignored that. In that event, the counters business would become a cost to the taxpayer, whereas at present it contributes to the Exchequer.

Crown offices are being downgraded or closed and replaced by franchised agents, so the Post Office's identity is being undermined. What obligation is there on Royal Mail or Parcelforce to use a local post office if it is at the back of—dare I say ?—a Sainsbury supermarket, newsagent or some other retail outlet?

Royal Mail will seek to maximise its market share as a private corporation. It will be under no obligation to the counters operation. Royal Mail and Parcelforce may even regard outlets stuck at the back of a Martins newsagent or Tesco as conflicting with their corporate image. That is another reason why a privatised Post Office may not want to use counters as a separate public sector operation.

After privatisation, we saw British Telecom take away services previously provided by counter outlets, such as the booking of international telephone calls. BT is currently presenting a proposal to cease contracting the sale of licence saving stamps. That is what happens when a unified business is broken up. I could quote many other examples. I am emphasising the case for the essential synergy between the different sections of the Post Office as currently structured.

Mr. Roger Evans (Monmouth)

The hon. Gentleman argues that all Post Office business should be preserved in one unit for the benefit of the Post Office and of all the people who work for it. Is that view held by the Union of Communication Workers, by which the hon. Gentleman is sponsored?

Mr. Hain

The hon. Gentleman will have to consult the UCW. I dare say that lots of postmen and postwomen will be knocking on the door of the hon. Gentleman's surgery, lobbying him to change his views. There is united opposition among Post Office staff to this privatisation. I make the case not solely on behalf of Post Office workers but primarily on behalf of the public. The counters business will suffer irreparable damage by being hived off and left as a rump service in the public sector.

There is already tremendous public concern about the diminishing number of rural post offices, which are closing at the rate of 200 a year. A privatised Royal Mail and Parcelforce will be under no obligation to maintain local letter delivery offices on the present scale. As they seek to cut costs, they will reduce the number of those offices. That is already happening, but closures will accelerate, which will undermine the viability of local post offices. They are already on death row. In the coming year, they will desperately hope that they can be reprieved through the defeat of privatisation.

Paragraph 5 on page 27 of the Green Paper states that value added tax will be applied to "non-obligatory services". Does that mean that Datapost, which is Parcelforce's express delivery service, will attract VAT? Perhaps the Minister will respond now or at the end of the debate. Datapost users want to know whether they will be charged an extra 17.5 per cent. The viability of that service, which faces stiff competition from private carriers, will be threatened by the application of VAT.

Paragraph 4 on page 27 suggests that VAT will be applied to contract parcels. The Government say that VAT will not be applied to stamps. Mention has been made of so-called granny parcels. I have never understood why it is thought that grandads never send parcels. I refer to parcels of the kind that you, Mr. Deputy Speaker, and I might send to elderly relatives.

The Government have made it clear that such parcels will not attract VAT, but there are many grey areas and contradictions in the separation. I understand why the Government sought to separate stamps from contract parcels. It would be deeply unpopular if the public suddenly had to bear VAT to the tune of nearly one fifth on current prices.

Will metered post and other pre-paid arrangements attract VAT? We deserve an answer from the Minister, but he is not responding. It appears that there is some confusion. There will be considerable scope for evasion and loopholes in the clearly defined sectors of contract parcels and stamps.

Small businesses, for example, do not have a contract in the sense referred to in the Green Paper, but are subject to regular collections by Parcelforce. It suits Parcelforce to collect rather than to have parcels taken to local post offices or delivery offices. There is no pre-payment but subsequent billing. Will VAT be applied in those cases? That is important to small businesses, which are already facing enormous pressures as a consequence of the Government's mistaken policies. They will want to lobby the Government.

There is a suggestion that VAT will be applied to other sectors, but the Green Paper makes no reference to them. Will that tax be applied to Quadrant, the Post Office's catering operation; to Subscription Services, another Post Office business; or to Cashco, which is the Post Office operation that transports money to post offices and between Royal Mail and Parcelforce—a multi-million-pound, if not multi-billion-pound, operation? Clearly, applying VAT to those cash movements will be an enormous issue, which the Government will have to tackle.

There are equally important technical issues, and they are skated over in the Green Paper. What about the royal parks? At present, Royal Mail and Parcelforce vehicles have access to the royal parks, not merely to deliver to them and collect from within them but also, by custom and practice, to drive through them, whereas other private operators have not. Indeed, other operators are specifically barred from driving through the royal parks.

If there is to be a level playing field with DHL, TNT and the other private operators, will Royal Mail and Parcelforce vans lose those privileges, or will they maintain them? We have a right to know the answer to that question, but it is another black hole in the Green Paper.

To pursue the colour analogy, there is also the question of yellow lines. At present, Post Office vehicles can park on double yellow lines without being given an immediate fine and attracting the wrath of local parking wardens, as would happen to you or me, Mr. Deputy Speaker. As private operators—that is what the Government propose—will Royal Mail and Parcelforce vehicles cease to have the privilege of being able to park without hindrance on double yellow lines?

We should know that, as it will affect the viability of the privatised Post Office and Royal Mail that the Government are so keen on. Will they still be viable without those privileges? We should also know whether the private operators with which they will compete will have such privileges accorded to them, too.

The most serious problem of all—the Government have not addressed it, and it has not been mentioned in the debate so far, except in the opening speech by my hon. Friend the Member for Livingston (Mr. Cook)—is the wider pattern of competition that it is threatened will be superimposed on the Post Office.

If this were simply a question of privatisation, there would be enough of a threat for us to avoid going down that road, especially for rural services, which are presently subsidised within the Royal Mail sector by nearly £300 million. A lean and hungry privatised Royal Mail could not possibly do anything other than reduce rural services. Under any privatisation regime, there would be enough of a threat to rural services, but when the extra competitive measures buried in the Green Paper are put on top of those, there is a serious threat to the viability of the standards to which we have become accustomed.

There is enough of a threat to second deliveries even now. The hon. Member for Tiverton (Mrs. Browning) did not allow me to intervene in her speech, but her constituents, especially those who are Post Office workers, should be told that she does not appear to favour second deliveries in town areas. Paragraph 9, on page 21 of the Green Paper, says: Nearly one area in six receives no second delivery". That is a revealing statement. In other words, five in every six areas do receive a second delivery; 85 per cent. of all households receive one. But the Government are not terribly keen on second deliveries. Their defensive explanation, saying that one area in six does not receive the second delivery, is almost a nod and wink towards getting rid of it.

Indeed, as I know from personal experience, having worked for the Union of Communication Workers and negotiated with Post Office managers, Post Office managers have consistently tried to get rid of the second delivery for years. Now the Government are effectively giving them the green light to do so. Not only will the public suffer greatly, but 27,000 jobs will be lost as a result.

That will be one consequence of privatisation. On top of that, there will be competition. It is important that the House understands what is at stake. The three separate operations within Royal Mail are processing, distribution and delivery. The Green Paper rules out competition in delivery. Why? Is that some charitable gesture? Have the Government had an attack of conscience for a change? No; the cost of delivery is the real cost of the Royal Mail. It costs four times as much as the other two functions. In other words, 80 per cent. of all the costs of the Royal Mail fall within the delivery sphere. So no competition is being opened up there.

Surprise, surprise—competition is being opened up in the profitable areas, in distribution and in processing. There will be competition, for example, in downstream access, which will allow private operators to come in and cream off the trunking—the easy work, on which a great deal of money can be made. It is said that competition will also be allowed in consolidation, which is mentioned in the Green Paper.

That will allow small companies, which cannot now become involved in mailsort and the other pre-sorting arrangements operated by the Royal Mail, to consolidate their activities together through a new private operator. The profits can then be creamed off, then be trunked down, and the rest will be dumped back into the Royal Mail delivery network. All the costs will be picked up by the privatised Post Office, while the private operators pick up the profitable traffic.

Another vignette from the Green Paper is the encouragement of niche licences, which will allow document exchange operators, such as Britdoc, to cream off more traffic, making a great deal of money in doing so. In addition, the monopoly is to be reduced below £1, allowing extra competition. If we add to privatisation, plus all those competitive measures, the RPI minus X price-cutting formula and the European Commission's proposals to take direct mail—40 per cent. of all Royal Mail's traffic—out of the reserved sector, a cumulative pressure will build up that will mean disaster for the Post Office in its privatised state. I believe that it will threaten the viability of the entire Royal Mail service, and place a serious question mark over its flotation. Potential buyers of Royal Mail should study that idea carefully, because they may be being sold a pup.

I believe that the alternative to privatisation has been clearly set out by my hon. Friends on the Front Bench. It is commercial freedom within the public sector. That is perfectly viable, and it exists all over the rest of the world. Even within Britain, it exists, and has existed, in such institutions as the BBC, BNFL, BP when it was still 70 per cent. publicly owned, and even in British Leyland.

There is no reason why commercial freedom within the public sector cannot be delivered, except privatisation dogma. It is that dogma in the proposals that we started off fighting, and we shall take that fight to the country. I believe that the Government can, be defeated on this measure.

8.47 pm

Mr. Andrew Welsh (Angus, East)

In his attack on the fault lines in the Green Paper, the hon. Member for Neath (Mr. Hain) got to the root of the problem. His warnings were well made. The hon. Member for Tiverton (Mrs. Browning) wanted to see the continuation of rural and suburban post offices. I certainly share her wish for such post offices to continue to grow and thrive, and I hope that the specific reassurances that she sought will be forthcoming from the Government.

Post offices are a crucial part of the local economy of every community throughout the length and breadth of the country. I give due praise and thanks to the men and women who daily provide us with that invaluable service. In my view, we should keep that piece of family silver, polish it up and use it for the benefit of the community, not sell it off at the first opportunity.

I shall be brief, because other hon. Members wish to speak, but I wish to add my support for the Post Office as a public service for the public good. The Victorians introduced that concept which is still supported by the majority of people in Britain. According to recent opinion polls, opposition to privatisation has risen from 64 per cent. to 81 per cent. in the two years since the Government first mooted their ideas. Even 53 per cent. of Conservative supporters are opposed to privatisation.

The reasons for change are Government driven. Treasury rules come from the Government. Access to cash for technological improvements is also controlled by the Government. As with water privatisation, there is a self-fulfiling prophesy. The Government create the rules and then pray them in aid when they want to force through their own dogma.

The Post Office is already efficient, effective and respected. Scotland's 13,000 Royal Mail staff ensure that 94.5 per cent. of first class letters are delivered next day. Given our geographical reality, that is good by any standards.

Under the existing system, the Post Office is a profitable organisation with pre-tax profits of £283 million in 1992–93 and probably even higher profits in 1993–94. The Treasury has not hesitated to dip into that treasure trove to the tune of £230 million in the year to March 1993. But that self-same Treasury also imposes cash limits, thus thwarting potential investment.

There are obvious threats to the commercial future of the Royal Mail—for example, electronic communications. Faxes equivalent to 15 million letters per day were transmitted last year, and electronic trading by computer has doubled in volume during the past year. But those challenges could be met if the Royal Mail had the freedom to do so. Its investment record, despite current Government straitjackets, is good. Greater efficiency, reorganisation, which has dramatically reduced the layers of management, and the adoption of the total quality concept have already happened within Scotland's Post Office service. So too has investment, as the new £30 million automated processing centre using the latest technology has shown, and another is to follow.

The Post Office has moved with the times and, if given proper support, will continue to do so. Freed from tough Treasury restraints, the Post Office could do much more. Financial freedom certainly seems justified. Last year, the Treasury allowed the Post Office to invest only three quarters of what it wanted to invest. That may seem bizarre for a consistently profitable organisation that has no debt and has amassed £500 million in cash. But in the curious world of the Treasury, any investment is undesirable since it contributes to the United Kingdom's budget deficit. Meanwhile, the annual dividend, which the Treasury extracts from the Post Office, currently £181 million, or virtually the whole of its net profit, is by private sector reckoning imprudently high.

Whatever guarantees are given, privatisation is bound to raise doubts and fears about the long-term future of post offices in rural areas and about the future of shops that are also sub-post offices. Those are genuine fears that the Government must address. Whatever commitment the Government make, a market-driven service will naturally pull in the opposite direction from the principle of uniform and standard delivery. It will cause uncertainties in the remote parts of Scotland and throughout the country.

It is not as if the Post Office were inefficient or out of date. It is consistently profitable, has restructured and streamlined its management, has invested in automated equipment and already operates across the boundary of the public and private sector.

I agree with the words of The Herald when it says that the role of the Post Office is changing and will continue to change as more and more people open bank accounts. It needs the freedom to expand and develop but the public interest will be better served if this happens within the public sector—as the public clearly wants. Everything that I heard the Minister say earlier points to the fact that he has clearly made up his mind about what he will do. Is the consultation paper yet another consultation sham from the Government? Will they listen to everyone and then do what they wanted to do from the beginning? The only commitment that we had from the Minister was that he would listen to what was said to him. We in Scotland know to our cost that when the Government consult the public they do not listen. In Strathclyde, 97 per cent. of the people showed that they did not want any change in their water services, yet that was what was done. Is the Green Paper yet another consultation sham from a Government who simply do not listen to the people but most certainly do listen to their own dogma?

I am concerned about the Scottish rural areas and the suburban post offices. This privatisation is most certainly a privatisation too far. Certain activities and organisations should be run as a public service for the public good, and this most certainly is one of them.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. We have nearly 20 minutes before the wind-up speeches and three hon. Members wish to catch my eye.

8.55 pm

Mr. Michael Connarty (Falkirk, East)

I shall try to be brief.

Unfortunately, I was unable to be present for some of the earlier speeches and, sadly, I missed the maiden speech of my hon. Friend the Member for Dagenham (Ms Church), whom I knew as the health and safety representative at a national level for the Manufacturing, Science and Finance Union. I know that I will have missed an excellent contribution, one of many that will be made, and I shall read it with interest tomorrow. However, I have heard some of the contributions to today's debate and the detail into which some hon. Members have gone and I shall not go over that ground.

The question that sticks in my mind when I think of the privatisation of the Post Office, which was opposed even by Lady Thatcher as a privatisation too far, is why the Government are going ahead with it. It makes no sense. It was described by Mr. Bill Cockburn as a cash cow for the Government. It has been milked vigorously by the Treasury in the past few years—£65 million last year and £160 million have been demanded from its profits. It is a profitable organisation working well in the public interest.

Clearly the Government are still driven by an anti-public or anti-community activity ethos. They do not like things that are done by the people and for the people by organsiations owned by the people. That does not gel with their idea of how the world should be run. This is one step in which not many of their supporters will follow them.

The hon. Member for Angus, East (Mr. Welsh) talked about the 60 per cent. of Conservatives who did not support this privatisation. That means that of the 900 people who voted for the Conservatives in Monklands, about 580 would not support it. When one gets that far down, one should stop digging. The Government should stop and look before they pursue the action that they obviously want to take, as far as the public will allow—the privatisation of the Post Office. I hope that some Conservative Members will have the good sense to prevent them from doing that. Not that it would hurt me; it would damage the Conservatives more. When they leave office, I want it to be as a result of a resounding failure. However, it will be in the interests of the public if we stop this crazy idea.

I have read some of the economics of Hayek, the great guru pushed in the Conservative party among those in the No Turning Back group—the hon. Member for Stirling (Mr. Forsyth) and others, some of whom are no longer with us because they were found out at the last election. He claimed that everything should be run according to a market model. In those days he went so far as to talk about having private prisons, and people laughed. According to the Hayek theory, one should even have private armies. That would be just one more step all the way for the Government. People laughed at the idea of private companies taking criminals to court and to prison, but that was the economic theory of Hayek and the lunatics of the ultra-right. The Government still support people who adhere to those crazy theories.

Two individuals are behind the proposals. One is the President of the Board of Trade. I was told that he was Tarzan in the House. I believe that he once swung the Mace around his head. We should forget that. I have another jungle image for him: that of the snake from The Jungle Book, which says to Mowgli, "Come inside my coils; go to sleep. It is all right—you will be safe." The President of the Board of Trade is playing that role now. He is saying to the people of Britain, "Go to sleep. Don't worry; it will be all right. The postal service will be safe in my hands." Just like Mowgli, the people of Britain should not listen to the snake behind the privatisation of the Post Office.

The other individual behind the proposals is Mr. Bill Cockburn, a Scot, I am ashamed to say, and the chief executive of the Post Office. When I and other hon. Members met him not long ago, he assured us that he was 100 per cent. behind the idea of keeping the Post Office in the public sector and fighting for commercial freedom.

There was reference earlier to people being intoxicated. Mr. Bill Cockburn is intoxicated by the smell of executive jet fuel. He has been talking to chief executives of other privatised industries, or perhaps he is attracted by the lure of share options that may make him, as it made others, millionaires while the people who work for the Post Office lose their jobs and the people who need the service lose the service.

The Government talk in the Green Paper about separating Counters, but we should examine what is happening in British Gas, which is voluntarily disaggregating its services. The Government are talking about having a retail section and closing 240 showroom outlets. They say that they will not be needed any longer. They will be amalgamated and will offer services for power or power equipment, whether involving gas, electricity or another power source.

The interesting thing about that scenario is that British Gas says that people will pay their gas bills at a post office. At the same time, the Department of Trade and Industry has set a target for the closure of Crown offices; letters have been in the public domain for some time. The Post Office executive has written that it is on target to meet the DTI's targets for the closure of Crown offices. It is important to know that that policy was inspired by the DTI, which pays Mr. Bill Cockburn, who is an employee not of the Post Office but of the DTI. He is paid directly by the DTI; he is on its salary books. It is important, therefore, that we realise that the people calling the tune are the same people who will end up privatising the Post Office.

The hon. Member for Tiverton (Mrs. Browning) said that the Green Paper poses no threat to local sub-post offices, but at a meeting at which I also spoke, the hon. Member for Bury, North (Mr. Burt), the Under-Secretary of State for Social Security, admitted openly to about 60 people that stopping transfer payments by giro encashment was a great attraction. He said that it was much more attractive for payments to be made by bank automated credit transfer because giro encashments cost the Treasury 44p, but bank automated credit transfer costs 4p. The Department of Social Security is immensely attracted to the possibility of people no longer encashing giros at post offices.

The Government deal with automation in the Green Paper. To me, automation means a swipe machine for one's smart card and the ability to put one's money anywhere. Down the road, a deal has been struck with the private sector so that people receive their money through automation. We warned them off, we fought them and we beat them the last time that the Government talked about it, but the paying Department has it in mind that automation should be introduced.

Fifty per cent. of local post offices' income comes from giro encashment. A giro encashment payment costs 44p and payments will cost 4p if they are carried out through an automated bank card or switch card, so post offices' income will be cut by 91 per cent. Very few local sub-post offices will survive that cut in income. The 2,700 post offices that receive a flat-rate subsidy would probably be joined by another 10,000, or the service would completely fall apart.

The proposal poses a threat to rural communities in Scotland and elsewhere. As a Scottish Labour Member who is sponsored by the Union of Communication Workers, I do not apologise for saying that. My constituency party receives £8,000 for administration as part of that sponsorship, but I receive none of that money. All hon. Members should have to declare their interests in and every single penny that they receive from private consultancies. That would square everyone's idea of how hon. Members should behave.

It can cost up to £10 to send a letter to some parts of the Western Isles or the Orkneys. At the moment, people there receive such a service for a single tariff. The Green Paper contains no guarantee that a uniform tariff will not be much higher in rural areas. A uniform tariff system could mean that a service would cost 25p in the city, but £3 200 miles away, and more than that 500 miles away. It would still be a uniform tariff system. As in the case of British Gas, there is pressure for tariffs to be linked to areas. The same pressure will arise from the privatisation of the Post Office—tariffs will be linked with distance. The system whereby there is one tariff for all first and second class letters will be broken up.

A privatised Post Office would contain no guarantees that the Government will not succumb to the pressure for changes. They will succumb to that pressure because of what will be described as commercial considerations.

During my time with the Union of Communication Workers, however, I have seen a much brighter future for the Post Office. It is a potential transmitter of all sorts of mail, whether that mail is electronic or conveyed by hand. For instance, when electronic shopping is introduced goods will have to be carried to customers. Lives will be changed; the new developments will be a boon—unless the Government say that that bright future must bring profit to some private organisation, and that that is more important than the workers or those who deserve their services.

We must stop this privatisation. I have a simple solution to the problem, and I shall continue to tell people all over the country what I have been telling them already. All summer—indeed, until the present Government are out of office—I shall tell them, "Deselect, or do not vote for, any Member of Parliament who supports the privatisation of the Post Office. That Member of Parliament intends to break up something that is precious to you, and to us."

9.5 pm

Mr. Gordon Prentice (Pendle)

I shall be brief, as I want to leave some time for my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), who is a member of the Select Committee on Trade and Industry.

I was shocked, but not surprised, by the way in which Conservative Members sought to caricature our stance. The Minister said that we wanted to create some kind of North Korean Stalinist state; the whole thing was bizarre and ludicrous. Some common ground exists. The Post Office must change: the Select Committee said that, the Opposition Front Bench has said it and we all believe it. That is where we part company with the Government, however, because privatisation—in whole or in part—is not the answer.

What do we mean by commercial freedom? Before I deal with that, let me ask a more basic question: why are the Government undertaking this exercise? It is ideologically driven; it is not about improving efficiency or effectiveness in the Post Office; it is as plain as a pikestaff that it is about raising £2 billion to finance tax cuts before the next general election.

Many speakers have reminded the House just how successful the Post Office is. According to the latest annual report, which has just been published, this year's profit amounted to £306 million. It was the 18th successive year of subsidy-free profit. The external financing limit target of £181 million was bettered; the Post Office contributed £182 million to the Treasury coffers. Since 1981, more than £1 billion has gone from the Post Office to the public sector. As I have said, the Government's exercise will not improve efficiency or effectiveness.

Let me tell Conservative Members that the general public feel deep unease and scepticism, which was articulated earlier by the hon. Member for Macclesfield (Mr. Winterton). The wider community believes that the Government will have cause to regret this privatisation. Last year, when the automated credit transfer system posed a threat to sub-post offices, I was inundated with protests: 7,000 people in my constituency, which has an electorate of 62,000, signed petitions which I delivered to 10 Downing street. The response to the current privatisation threat will be much greater.

Those sub-postmasters and postmistresses were not only concerned about automated credit transfer; they were straining at the leash to provide services that the Government have not hitherto allowed sub-post offices to provide. They wanted to act as agents for banks and building societies, and to sell tickets for various events. For months, we witnessed the absurd fiasco of the Government agonising over whether sub-post offices could provide fishing licences. It is the stuff of a hall of mirrors.

I shall pose another fundamental question. What on earth happened to the doctrine of the mandate? The Prime Minister's smiling visage is on the Conservative election manifesto, "The Best Future for Britain", in which there is some mention of the Post Office, but not a word about the privatisation of it. If the doctrine of the mandate means something, surely this threatened legislation should be stopped in its tracks when it reaches the other place.

Some of my hon. Friends, including the hon. Members for Falkirk, East (Mr. Connarty) and for Birmingham, Yardley (Ms Morris), have mentioned the widespread fears that Post Office privatisation will mean only another bonanza in pay and perks for directors and grotesquely generous share option schemes. In fact, the water industry and North West Water, which is the water company in my area, was mentioned by the Prime Minister earlier today. The flotation of the water industry was under-priced by£2 billion and £5 billion of debt was written off to enable privatisation to go ahead. Yet, by common consent, it has been disastrous. Since privatisation, charges have risen by 67 per cent. Another disastrous privatisation is that of British Rail, a natural monopoly. Privatisation of it is faltering and the scales are falling from people's eyes when they see the practical effect of privatisation. The same thing will happen with the Post Office.

Privatisation of the Post Office has been ideologically driven and it has not been thought through. The review gestated for two years during which it looked at all sorts of ways in which to make the Post Office more responsive—allegedly. It looked at breaking up the Post Office into separate functions of letter delivery, sorting and so on, and came to the not surprising conclusion that that was impractical. In fact, that idea was always hare-brained. The two-year delay in bringing forward proposals meant that the Post Office could not develop the services that it wanted. The Post Office complained about being enveloped in a fog of uncertainty and, only a few months ago, the chairman of the Post Office talked of an impending crisis. The way in which the legitimate concerns of the Post Office were swept to one side or ignored for two years spoke volumes. When the President of the Board of Trade appeared before the Select Committee, he explained away the two-year delay in reaching conclusions by saying that it was because of the complexities of the issues. It was complex only because the end gain—privatisation by hook or by crook—was the starting point. Privatisation was the name of the game, not making the organisation more efficient.

The uncertainty over the future of the Post Office was caused by anxiety about external political reaction to privatisation. That point was conceded earlier by the former Minister with responsibility for the Post Office, the hon. Member for Gainsborough and Horncastle (Mr. Leigh), when, in a fit of pique after he was sacked, he accused the Prime Minister of "political funk" because the Prime Minister had failed to grasp the privatisation nettle. Well, they have grasped it now and it will sting them. In fact, the Government's intentions—real "Alice—in-Wonderland" stuff—became clear only because of a leak from the Department of Trade and Industry, which brought the President of the Board of Trade to the House and the subsequent Green Paper before us.

Many parts of the Green Paper have not been examined adequately, such as the extent of the Post Office monopoly, mentioned on page 24, where the Government say that more detailed work will be needed to ensure that, while safeguarding the Royal Mail's monopoly, there is fair competition between it and the new entrants into the market. The Minister for Industry talked about some degree of monopoly, but he could not be more precise than that.

There is a whole range of ways in which the Post Office, within the public sector, could improve the service, as Post Office people and hon. Members on both sides who want the Post Office to be a successful and dynamic organisation want. It is bizarre that the Post Office cannot enter joint ventures and that is a point that we want to address. It is bizarre that the only trading organisation in the public sector—the Post Office—is fettered when it seeks to borrow. There is a whole series of related issues that should be developed, but not with the sword of Damocles of ultimate privatisation hanging over the head of the Post Office. It is possible for the Post Office to stay in the public sector and to deliver the service that people in here and outside want.

9.15 pm

Mr. Michael Clapham (Barnsley, West and Penistone)

As I have only a couple of minutes, I shall merely refer to the suggestions in the report by the Select Committee on Trade and Industry. The Minister has obviously looked at the recommendation in the report, which is that there is a need for change. However, the report does not suggest any form of ownership. If the Minister has read carefully the minutes of the evidence given by the Post Office management, he will have seen clearly that they were prepared to accept commercialisation. Their view was that if the Post Office was freed from the straitjacket of the external financing limit, it would be able to compete with Post Office services such as those in Sweden, France, Germany and Canada where the post offices are all state owned.

I urge the Minister to consider option one as the major option to go for. It would give the Post Office the opportunity to be able to raise capital on the private market. It would give it the opportunity to enter joint ventures so that it could compete with its main competitors, such as the Dutch post office, and it would allow it to continue its unique service, which is so important to rural constituencies such as mine. My constituency is made up of 21 villages and it depends on the service that the Post Office provides.

I urge the Minister to go for option one. It would give us the opportunity to keep the Post Office in the public sector and, at the same time, it would give it the opportunities that it deserves. It would also ensure jobs for the work force and the uniqueness of the service for the British people.

9.17 pm

Mr. Jim Cousins (Newcastle upon Tyne, Central)

It gives me particular pleasure to say something about the speech of the new hon. Member for Dagenham (Ms Church) who, in her contribution on this important matter, had the combination of very strong and clear thoughts and a gentle and firm delivery. That is an example to us all and I am sure that we shall hear much more from her in the House.

I begin with a quotation which, I hope, will establish some common ground. In this year's annual report, the chief executive of the Post Office says: we have ambitions stretching beyond the UK. We have the ability to be a major player in the global postal market and a burning ambition to be the postal administration of first choice—the mailing centre of Europe… And we have a trump card—one of the largest and best workforces and network of sub post offices in the world"— he evidently did not visualise the separation of the sub-post offices from the rest of the network— an asset highly valued by customers, clients and the community alike. But, unless we can respond on equal terms to the competition from other overseas post offices and be given the opportunity to offer a wider range of activities at our post offices, we could lose ground at home and abroad and head for a spiral of decline. We propose to achieve that by offering commercial freedom inside the public sector. Every Opposition Member who has spoken—they spoke for Wolverhampton, Birmingham, Neath and Falkirk—including the members of the Liberal Democrat and Scottish National parties, has supported the idea of achieving success through commercialisation in the public sector. That would combine the trump card of public services with the commercial opportunities that the chief executive mentioned.

In the two years that we have waited for the Green Paper £100 million has been cut from the public investment programme of the Post Office and the price of stamps has been subject to an entirely unnecessary increase to meet the imposed EFL targets of the Government. As a consequence, the traditional pillar box mail has declined and is falling steadily. If the Government adopt the option that they endorse in the Green Paper, they will proceed to subject the Post Office to entirely unnecessary political controversy. What we propose could be achieved within the public sector and we believe that there is consensus in favour of that option.

My hon. Friend the Member for Vauxhall (Ms Hoey) made an important point when she said that the Post Office's public service is one of those great popular institutions that binds together all parts of the United Kingdom. What the Government endorse is an uncertain, twilight-zone proposal, which contains some illogical contradictions that I should like to point out in the limited time available to me.

It is a fundamental error to see this privatisation—if that is how we are to regard it—as being like those of the past. The productivity gains have already been achieved and, sadly, jobs are being stripped out of the Post Office right now, at a rate of between 5,000 and 8,000 a year. Last year, a 2 per cent. unit cost reduction was achieved in postal services. Those achievements have been made now, inside the public sector.

The fundamental point, which is not disputed by many Conservative Members who spoke in the debate, is that the Post Office service is no natural monopoly. There is no contained infrastructure that gives the Post Office some kind of superiority or exclusive access. It does not have a unique right of access to homes and businesses—it is already competing straightforwardly in those markets. There are 4,000 competitors in the parcels business from TNT down to the bike boys who we see on every street.

There is no controversy about the fact that the Post Office is already in commercial competition. The basis of the network which will keep it together and sustain it in the future—the trump card to which the chief executive of the Post Office referred—is its brand name and its good will. That would be put at risk if we separated post offices from the rest of the network and sold 49 per cent. of what was left.

We believe that the uniform price and universal delivery, which the Government claim to be nonnegotiable, can be sustained in the long run in the face of competitive pressures only by a clear commitment to the Post Office as a public service, underwritten by public ownership and public control. That is our objective. The market cannot guarantee that uniform price and universal delivery. The legal guarantees that the Government promise are worthless outside public control, because if the Government intend that the Post Office should operate as a commercial organisation, they should not impose on it the unusual legal obligations set out in the Green Paper. Nor should they subject it to the internal cross-subsidy requirements, which the undertakings to deliver a standard price and universal delivery inevitably make necessary. In every other privatisation those internal cross-subsidy systems, which are essential to maintain the uniform price and universal delivery, have been the subject of specific attacks from all the regulators. That is why the Government's proposal is insecure and is a twilight zone.

The guarantees that the Government have offered cannot be delivered. Indeed, in the Green Paper, the Government make it clear that the guarantee of uniform price and universal delivery is not the legal guarantee that they offer, but that of the letter monopoly. That creates the critical gap in the whole proposal. We simply do not know how the Government propose to deal with the letter monopoly in the future. If it is withdrawn, the uniform price and universal delivery system will collapse—and it will collapse, whatever guarantees the Government offer in legal terms.

In the Green Paper, there is no guarantee of allowing Post Office Counters to take on new business. It said that that might be possible, but some severe conditions are laid down. Tonight, there is an opportunity for the Minister to make clear how he proposes to deal with that uncertainty because it is far from clear that the bit that is left in the public sector will achieve commercial freedom.

Furthermore, what will sub-post offices make of these proposals? Are they to assume that in the future they will have the exclusive right to deal with Royal Mail and Parcelforce, or will it be possible for a 51 per cent. or 49 per cent. privatised Post Office to allow parallel networks to be created to deliver mail and parcels, bypassing the sub-post offices?

We have been told that there will be a contract. Will there be exclusivity in that contract? If there is no exclusivity, the guarantees to the sub-post offices become virtually meaningless. What we are offered in the Green Paper for sub-post offices is not law, only guidelines—a phrase which may prove to be famous in the history of public administration in this country—under five restrictive conditions.

We come to the whole centre of the gobbledegook, the mishmash which the Government have created around the Green Paper—the mysterious footnote which refers us to the standard international system of national accounts, and justification for the fact that a 49 per cent. Government share ownership in the Post Office means that the Post Office will suddenly achieve commercial freedom. That is the only mechanism by which it can achieve it.

For those of us who have made the standard system of national accounts our bedtime reading, I find it odd that the Government should pick on Jacques Delors' final utterances as a means of securing commercial freedom. It is no wonder that there was a certain cry for help about that from the hon. Member for Leeds, North-West (Dr. Hampson) earlier in the debate.

If there is a dilemma here, it is a dilemma of the Government's own making. Forty-nine per cent. ownership does not give an escape because the same paragraph, which is quoted incompletely in the Green Paper to describe how the national accounts and the public sector should be drawn up, says: A corporation which a government is able to control as a result of special legislation should be treated as a public corporation even if the government does not own a majority of shares. If there is a dilemma, and it is a dilemma of the Government's own making, they have not escaped from it.

In the Green Paper, there is absolutely no certainty of securing the future of Post Office services. Yet at the same time the Government propose to load the privatised Post Office—the 50 per cent. plus one share ownership Post Office—with legal obligations which no commercial company would accept.

There is also a central mystery about what the Government intend to do with the share ownership that is left. In the Green Paper, it is not clear whether the Government will vote those shares. We are told that the Government will not routinely vote those shares but that there will be circumstances in which they will vote them. It is therefore vital that now, at the beginning of the process, the Minister makes clear how those shares are to be voted.

The answer lies in one of the Postman Pat stories. Some of us will recall from our literary activities the story entitled, "Postman Pat's Wildcat Chase ", in which Jess the cat—in this case the Government—fatally confuses Mrs. Hubbard's knitting with a woolly monster. This entire discussion about the significance of 49 per cent. plus one or 50 per cent. minus one, and about the possibility of commercial freedom in the public sector, is much the same as wondering whether we are dealing with Mrs. Hubbard's knitting or the woolly monster. Finally, when Postman Pat manages to convince Jess the cat that Mrs. Hubbard's knitting is not a woolly monster, he says, I'm sorry he made such a mess. I know he didn't mean any harm. He's not really a naughty cat—he was only running for his life. Perhaps the President of the Board of Trade is running for his life now: his hon. Friends will certainly be running for their lives later.

There is no majority in the country for this. The country well understands the significance of the trump card: the core public services and the good will and public support on which the future commercial opportunities of the Post Office depend. We propose to take up the cause of the public and to defend that trump card. We shall defend a public brand name that has been established over 150 years, and the public good will that is reflected in the core public services.

We shall resist this break-up. We shall not accept Government legislation introduced to dismember the Post Office's services. There is an alternative and, in a half-hearted way, it is already on the table. That is the alternative that we shall begin to argue for.

Mr. McLoughlin

Can the hon. Gentleman confirm what he said earlier—that if the Government decide to move forward with their preferred option, a future Labour Government would buy back the shares and renationalise the Royal Mail?

Mr. Cousins

I certainly did not say that

Mr. Peter Ainsworth

rose—

Mr. Cousins

Let me deal with this point first. I adopted the same formula as my hon. Friend the Member for Livingston used. When asked the question, he clearly said that we think the Government are mistaken and foolish to embark on this. We cannot predict whether they will persist in their foolishness. If they do, we cannot predict how the House of Commons will react to it. Even if the House agrees to it, we cannot be sure what precise form it will agree to. However, should the option that the Government are advancing pass into law, we would seek to re-establish public control over these core public services. That is our policy and our intention and, if I have understood matters aright, it is also the policy of all the Opposition parties represented in the debate.

Mr. French

When asked earlier whether a future Labour Government, if there were one, would renationalise the Post Office, the hon. Gentleman's answer was yes.

Mr. Cousins

I did not say that a future Labour Government would renationalise the Post Office, or that they would buy back shares. The Government have invented those fictions. Like poor Jess the cat, they cannot distinguish woolly monsters from Mrs. Hubbard's knitting.

Mr. Peter Ainsworth

The hon. Gentleman can resort to as many formulae as he likes. It was quite clear to me, and I asked the question, that the hon. Gentleman said that a future Labour Government, should one exist, would seek to renationalise the Post Office. The hon. Member for Livingston (Mr. Cook) will be able to read that in Hansard tomorrow morning.

Mr. Cousins

My hon. Friend the Member for Livingston will be able to read all my remarks on that matter with complete comfort, because they entirely echo his remarks at the start of the debate.

We return to the heart of the proposition. The central point was made, in a way, by the intervention of the hon. Member for Macclesfield. I do not know how we should regard him in the House, but he sits on the Conservative Benches. He, too, said that the public wanted and desired commercial freedom in the public sector. That is what the people of the country want. The Government oppose that, and are putting forward the twilight zone solution in which a public service will be broken in two and the Royal Mail and parcels will in future be neither one thing nor the other. Neither the markets nor anyone else will understand the balance of power in the organisation that the Government propose to create in their preferred option.

We say to the Government kindly and gently, as we always do—clearly, gently and firmly, in the style suggested to the House by my hon. Friend the Member for Dagenham—that if they persist in that, perhaps it would be time for them to go home and think once again.

9.35 pm

The Parliamentary Under-Secretary of State for Technology (Mr. Patrick McLoughlin)

I agree with the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) on one thing: I pay tribute to his hon. Friend the Member for Dagenham (Ms Church) on her first speech to the House. I heard the speech this afternoon, and it was an impressive performance. She spoke with great clarity and feeling.

I notice that the hon. Lady's predecessor, one-time Labour party leadership contender, and at one time no doubt Prime Minister contender, has decided to desert the country for a country that has now privatised its post office service. I thought that that was perhaps an adequate way to start the debate.

I congratulate the hon. Lady. We all feel for her, because we all know what a trial it is to get one's maiden speech out of the way and to start to get more into the hurly-burly of the House of Commons.

Of the speeches of the 10 Labour Back Benchers who spoke, there were four interesting contributions, from the hon. Members for Falkirk, East (Mr. Connarty), for Neath (Mr. Hain), for Vauxhall (Ms Hoey) and for Birmingham, Yardley (Ms Morris). I would expect them to make interesting contributions, because they are all sponsored by the Union of Communication Workers, and it is a pity that perhaps—[Interruption.]—it is a pity that perhaps some of them did not declare it right at the beginning of their speech. Indeed, the hon. Member for Falkirk, East—I pay tribute to him—goes a little further and says that he gets £8,000 a year from the UCW in the Members' register.

Mr. Connarty

The hon. Gentleman does not recall accurately. I said that my constituency party receives £8,000 for its administration. I receive no personal remuneration.

Mr. McLoughlin

I apologise to the hon. Gentleman if I misquoted him, but I thought that it was worth putting those four contributions on the record.

We have had several demands today from the hon. Member for Newcastle upon Tyne, Central and others about the commercial freedoms that they keep talking about that they would like the Post Office to have. That is interesting. They often speak about commercial freedoms, but whenever the idea of extending further freedoms to the Post Office is mooted we often receive letters from leading members of the Opposition Front Bench team, saying that perhaps those freedoms should not be given.

I have one such letter from the Opposition Chief Whip, the right hon. Member for Bishop Auckland (Mr. Foster), which says: I enclose a copy of a report from a recent issue of the Northern Echo. I do hope that you will ensure that the fullest consultations are carried out before any such proposal for the Post Office to deliver Sunday papers by the post is arrived at. So the Opposition continually ask for extra commercial freedoms for the Post Office, but every time that more commercial freedoms are even considered or suggested, the alarm bells rise from the Opposition Benches.

Although, as we have made clear, we are seeking views, there are three cardinal things that we stand by, and on which we are not prepared to negotiate. Those commitments include a commitment to a nationwide letter and parcels service, with daily delivery to every address in the country. I say to my hon. Friend the Member for Tiverton (Mrs. Browning) that that involves delivery on six days to every home.

We are committed to a uniform and affordable price structure under which it will cost the public the same to post a letter no matter where it is posted or to where it is sent throughout the United Kingdom. We are also committed to a nationwide network of post offices, and we need no lectures from the Opposition about the importance of that. Some of my hon. Friends who represent rural constituencies have a number of post offices in their areas and we strongly feel that they should be given the extra commercial freedoms set out in the Green Paper.

Our postal services are operating in a world of rapid change. They must adapt if they are to thrive as businesses in the face of growing competition and if they are to continue to meet the needs and demands of their customers. A policy of standing still will not preserve our postal services, nor will it protect the jobs that the hon. Member for Neath and other hon. Members spoke so much about. It will simply ossify them and condemn them to gradual decline. Our postal services recognise the need to change while maintaining and improving their standards of service and preserving the three non-negotiable commitments to which I have referred.

Mr. Hain

If the Minister is so keen on change and on meeting the competitive demands that are undoubtedly bearing down on the Post Office, why do the Government not give commercial freedom now instead of waiting the 18 months or so that will be needed to put a Bill through Parliament—if it gets through Parliament? Why not give commercial freedom now so that we can take on the Dutch and the others?

Mr. McLoughlin

We have made it fairly clear that we are consulting on the options. It is important to move forward with the right proposals and I am surprised that the hon. Gentleman condemns that.

As I have said, our postal services are operating in a world of rapid change and must adapt if they are to thrive as businesses in the face of growing competition. The fact that we are addressing those issues and charting a way forward for the Post Office is greatly welcomed, certainly by people to whom I have spoken.

The changes facing our post office network, the largest retail network in Europe, are of course different from those confronting Royal Mail. Most services that are available in post offices are now available elsewhere and new shopping habits have evolved with the shift from smaller retailers to larger stores. To enable our post offices to respond positively to that challenge, the Government have decided to allow Post Office Counters greater commercial freedom within the existing structure. That will allow our post office network to provide a wider range of services on behalf of new and existing private sector clients. Moreover, new technology offers the opportunity to automate much of the routine clerical work which, like bindweed, is strangling the business. The Government have made it clear that they intend to bring those changes rapidly to fruition.

The hon. Member for Falkirk, East attacked British Gas, which has signed a contract with the Post Office to enable people to pay gas bills at the Post Office without charge. I thought that the hon. Gentleman would have welcomed that rather than condemn it. I certainly think that most customers and constituents welcome it.

Mr. Connarty

The Minister seems to have a paranoia this evening. I think I said that, while it had been decided that people could pay their gas bills through post offices, the irony was that the Post Office and DTI target was to close post offices throughout the country.

Mr. McLoughlin

The hon. Gentleman is wrong again. Many closures occur because no one is willing to take on the franchise. The hon. Gentleman is talking about the conversion programme for Crown post offices. As the hon. Member for Gordon (Mr. Bruce) said, although there is sometimes controversy on the announcement of changes, the service that is provided by the people who take over the franchise greatly improves and that is to the benefit of local consumers and townspeople. We shall not take any lectures from the Opposition on that.

I have no doubt that the Opposition are full of good intentions when they talk about giving greater commercial freedom. But no Labour Government have ever done that and I doubt that when the call comes to punch a future Labour Government will be able to do it—if Labour were ever elected to govern. We often talk about intent but the reality of government is different from the reality of opposition. I remind the Opposition of what the last Labour Chancellor of the Exchequer said at a Labour party conference. He said: I am going to negotiate with the IMF on the basis of our existing policies, not changes in policies, and I need your support to do it. But when I say 'existing policies' I mean things we do not like as well as things we do like. It means sticking to the very painful cuts in public expenditure on which the Government has already decided. It means sticking to a pay policy which enables us, as the TUC resolved a week or two ago, to continue the attack on inflation. It is easy when in opposition to forget the responsibilities of Government. Labour Members are so dismissive of the past.

The hon. Member for Vauxhall said she did not believe that we would stick by any of the commitments we have given, such as a universal tariff and a free service for the blind. That was the sort of argument Labour Members used when we privatised British Telecom. What has happened since? There has been massive investment in telecommunications, there are more telephone boxes and, even more incredible, they actually work. We will listen to no lectures from them about providing and improving universal services. Every time they talk about such matters, they are wrong. We have taken the correct action and improved the service to the consumer. In addition, the companies that we have privatised have become world leaders and have attracted a large amount of new business.

My hon. Friend the Member for Leeds, North-West (Dr. Hampson) served on the Select Committee and he told us of some of the arguments put and points raised during its consideration of the report. My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), who has great knowledge of these matters, asked a number of questions. In effect, he asked me to pre-judge the Government's consultation exercise. He also made a number of suggestions about ways in which he wanted us to go further. I want to reflect carefully on his speech and include it in our consultation exercise. He made a number of recommendations that we may wish to follow at a later stage. I assure him that I have taken on board some of his points.

Mr. Cousins

The hon. Member for Gainsborough and Horncastle (Mr. Leigh) described the offer of new business for Post Office Counters as mealy-mouthed. He said that the Government were imposing conditions by saying that the market was well served by the private sector, by questioning whether the involvement of Post Office Counters would create market power and by saying that there was a need to ensure that third parties were not discomfited. Is the Minister saying that he is taking the hon. Gentleman's point seriously?

Mr. McLoughlin

I do not know how the hon. Gentleman has the cheek to refer to the Government as mealy-mouthed. He should remember how he tried to scoot away from answering the clear point raised by my hon. Friend the Member for Surrey, East (Mr. Ainsworth).

When the hon. Member for Livingston (Mr. Cook) appeared on the "Today" programme, he was constantly pushed by Peter Hobday to say whether he would renationalise the Post Office. Finally, the hon. Gentleman said: No. Hang on, hang on. Let me answer your question. At the moment the Post Office is in the public sector. We want to keep in there. If it is put in the private sector we will consider that question when and if the time arrives. I must say that I personally would not rule out bringing it back. Of course, the hon. Gentleman has to get his new orders from whoever is chosen to lead his party, whether it is a moderniser or someone else.

The Labour party's policies change at each general election. Its 1992 manifesto said: The provision of water is so fundamental that it is a priority for return to public control… We will restore public control of the National Grid and give it new duties and powers to ensure the long-term security of electricity supplies. They"— that is the Conservatives— would, if they won power again, privatise water, electricity, steel and other services, and the industries built up from the public investment over past years… We shall extend social ownership by a variety of means, as set out in Labour's detailed proposals. In particular, we will set up British Enterprise, to take a socially owned stake in high-tech industries and other concerns where public funds are used to strengthen investment… Social ownership of basic utilities like gas and water is vital to ensure that every individual has access to their use and that the companies contribute to Britain's industrial recovery, for instance, by buying British. We shall start by using the existing 49 per cent. holding in British Telecom to ensure proper influence in their decisions.". They do not say what is proper.

If any party is blinded by dogma, it is the Labour party and its dogma of constantly believing in the public sector. They have been repeating the dogma of public good, private bad at length today. We are the only party addressing the serious and wide-ranging issues to ensure that the Post Office survives and expands its business into the next century.

I was asked a number of questions to which I shall try to respond. The hon. Member for Birmingham, Yardley (Ms Morris) asked about pensions. The Government are well aware of the importance of protecting pension rights of past and present employees. That is why we have given an undertaking, expressed in the Green Paper, that such rights will be safeguarded. The precise mechanism for dealing with pension arrangements in any legislation will have to be worked out with the companies concerned and we will take into account the representations of pensioners, but I give the House an assurance that employees and pensioners will continue to enjoy pension rights that are at least as good as they have at present.

The hon. Member for Gordon and, in an intervention, the hon. Member for Neath asked about Sunday collections. Perhaps they were a little unwise to raise that subject. A number of services, such as the second daily delivery of mail and Sunday collections, are not currently part of Royal Mail's social commitment, but it is an operational matter to ensure that quality targets, such as the percentage of first-class letters delivered the next working day, are not only met but improved. If, for example, the second delivery did not exist in the vast majority of places, Royal Mail could not deliver 92 per cent. of first-class mail the next working day—a figure that has made it the highest quality postal administration in Europe.

If we proceed with the Government's preferred option, we will write specific safeguards into the terms of their appointment. The targets are demanding and could well cover issues such as Sunday collections and the timing of daily deliveries. They will be subject to the scrutiny of the regulator, who will ensure that the service received by the public goes from strength to strength.

It is interesting to ask when Sunday collections were suspended. When did Royal Mail do away with Sunday collections? It will come as no surprise to the House that Sunday collections were suspended in 1976, no doubt with the agreement of the then Secretary of State or the person then responsible for the Post Office. So the improved efficiencies have been achieved and encouraged under a Conservative Government. We shall not privatise an industry to see it give a worse service to the public; we shall want a better service to the public, as we have seen with every single privatisation we have pursued through the House. When the hon. Gentleman asked about the Sunday collection, he hit on a very poor point. It is interesting to see that somebody who usually jumps to his feet every time he is challenged on any subject is stuck to his seat as if he were stuck there with Loctite glue—perhaps that would be a favour to us all.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) echoed a point made by a number of my hon. Friends about the importance of the post offices in their constituencies. That was also mentioned by my hon. Friend the Member for Surrey, East who spoke about nationwide collection.

We heard the usual scare stories from the Scottish nationalists. The hon. Member for Angus, East (Mr. Welsh) could not have read the Green Paper because its assurances go a long way to meeting the concerns that he expressed.

Mr. Welsh

If there is genuine consultation and the majority of people oppose the Government's plans, will they withdraw their plans—or is it a case of the usual sham?

Mr. McLoughlin

I made it clear, as did my right hon. Friend the Minister for Industry, that there will be consultation. At the end of the day, when the Government bring forward legislation, it will be for Parliament to take a view. There will be wide consultation with all the people involved. We have not embarked on consultation to ignore what emerges from that exercise.

We have heard many scare stories from Opposition parties about every privatisation. In 1985, the right hon. Member for Salford, East (Mr. Orme) said that there was no evidence that the gas privatisation Bill would improve efficiency, provide a better service, produce cheaper gas or release or create competition. The hon. Member for Gordon said that 16 million gas consumers could expect only one result—to pay increased gas prices, higher than the rate of inflation, for years to come. As those remarks illustrate, the privatisation and subsequent regulation of British Gas provided an early example of what Labour and the Liberal Democrats repeatedly called privatisations too far.

The privatisation of British Gas was a great success for consumers. Their experience before and since privatisation could hardly have been more different. In the early 1980s, domestic gas prices rose more than one third in real terms. Since privatisation in 1986, real-term prices have fallen below their January 1979 level. In July 1992, real-term prices were cut by an average 3 per cent., and a further 2 per cent. reduction occurred in October. Inflation was running at about 4 per cent. The number of disconnections also substantially reduced—something that I thought Opposition parties would welcome.

We heard then all the scare stories that we heard today. That is all that the Opposition can live off and fight with. When we take privatisation forward, their scare stories are knocked out and disproved. We will bear that important point in mind as we go through the consultation process.

Opposition Members have approached this privatisation with the closed minds that we have come to expect of them. From the start, they ruled out the option of privatisation, even though some of the most successful companies in Britain today were privatised. The Opposition have resorted to the scare stories that they trotted out in the past. In the Second Reading debate on the Telecommunications Bill, the right hon. Member for Salford, East said: Despite the Minister's assurances, we remain unconvinced that the level and range of services available will be continued. We maintain that market forces will demand that a privately owned BT cuts those services that incur a loss or make little profit. Rural services, emergency services, call boxes and provision for the blind and the disabled have an uncertain future."—[Official Report, 18 July 1994; Vol. 46, c. 41.] The Opposition said that when we privatised British Telecom, but look what happened. The number of BT call boxes has risen from 77,000 in 1984 to more than 100,000 today, and 96 per cent. of them work at any one time—up from only 75 per cent. six or seven years ago. The service is improving all the time. BT completes 95 per cent. of customer installations within the agreed time. Its main tariffs have fallen more than 30 per cent. in real terms since privatisation and will continue to fall at a rate of retail price index minus 7.5 per cent.

The leopards on the Benches opposite have not changed their spots. For all their talk of modernisation, their diet is still public sector ownership, Government control and clause 4 socialism. The Opposition want to give Royal Mail all the commercial freedoms of the private sector but none of the financial disciplines, with all the security of being in the public sector. So much for control of public expenditure. They want to do something that no Labour Government found a way of doing in the past.

What we have heard today has been the irresponsible attack of an Opposition. What is more, despite the fine-sounding promises from Opposition Members about the far-reaching changes that they want, the Labour party has shown itself today to be convinced of the merits of public ownership, and has promised to take Royal Mail back into the public sector if the Government's preferred option is implemented. What would be next? British Telecom? British Gas? Electricity? We await the answers with great interest. In the meantime, I commend the amendment in the name of the Prime Minister to my hon. Friends.

Question put, That the original words stand part of the Question: —

The House divided: Ayes 273, Noes 305.

Division No. 292]	[9.59 pm
AYES
Abbott, Ms Diane	Boyes, Roland
Adams, Mrs Irene	Bradley, Keith
Ainger, Nick	Bray, Dr Jeremy
Allen, Graham	Brown, Gordon (Dunfermline E)
Armstrong, Hilary	Brown, N. (N'c'tle upon Tyne E)
Ashdown, Rt Hon Paddy	Bruce, Malcolm (Gordon)
Ashton, Joe	Burden, Richard
Austin-Walker, John	Byers, Stephen
Banks, Tony (Newham NW)	Cabom, Richard
Barnes, Harry	Callaghan, Jim
Barron, Kevin	Campbell, Mrs Anne (C'bridge)
Battle, John	Campbell, Menzies (Fife NE)
Bayley, Hugh	Campbell, Ronnie (Blyth V)
Beith, Rt Hon A. J.	Campbell-Savours, D. N.
Bell, Stuart	Canavan, Dennis
Benn, Rt Hon Tony	Cann, Jamie
Bennett, Andrew F.	Carlile, Alexander (Montgomry)
Bermingham, Gerald	Chidgey, David
Berry, Roger	Chisholm, Malcolm
Blunkett, David	Church, Judith
Boateng, Paul	Clapham, Michael

Clarke, Dr David (South Shields)	Hoyle, Doug
Clarke, Eric (Midlothian)	Hughes, Kevin (Doncaster N)
Clarke, Tom (Monklands W)	Hughes, Robert (Aberdeen N)
Clelland, David	Hughes, Roy (Newport E)
Clwyd, Mrs Ann	Hughes, Simon (Southwark)
Coffey, Ann	Hutton, John
Cohen, Harry	Illsley, Eric
Connarty, Michael	Ingram, Adam
Cook, Frank (Stockton N)	Jackson, Glenda (H'stead)
Cook, Robin (Livingston)	Jackson, Helen (Shef'ld, H)
Corbett, Robin	Jamieson, David
Corbyn, Jeremy	Jones, Barry (Alyn and D'side)
Corston, Ms Jean	Jones, Jon Owen (Cardiff C)
Cousins, Jim	Jones, Lynne (B'ham S O)
Cox, Tom	Jones, Martyn (Clwyd, SW)
Cunliffe, Lawrence	Jones, Nigel (Cheltenham)
Cunningham, Jim (Covy SE)	Jowell, Tessa
Cunningham, Rt Hon Dr John	Kaufman, Rt Hon Gerald
Darling, Alistair	Keen, Alan
Davidson, Ian	Kennedy, Charles (Ross, C&S)
Davies, Bryan (Oldham C'tral)	Khabra, Piara S.
Davies, Rt Hon Denzil (Llanelli)	Kilfedder, Sir James
Davies, Ron (Caerphilly)	Kilfoyle, Peter
Davis, Terry (B'ham, H'dge H'l)	Kinnock, Rt Hon Neil (Islwyn)
Denham, John	Kirkwood, Archy
Dewar, Donald	Lestor, Joan (Eccles)
Dixon, Don	Lewis, Terry
Dobson, Frank	Litherland, Robert
Donohoe, Brian H.	Livingstone, Ken
Dunwoody, Mrs Gwyneth	Lloyd, Tony (Stretford)
Eastham, Ken	Llwyd, Elfyn
Enright, Derek	Loyden, Eddie
Evans, John (St Helens N)	Lynne, Ms Liz
Ewing, Mrs Margaret	McAllion, John
Fatchett, Derek	McAvoy, Thomas
Faulds, Andrew	McCartney, Ian
Field, Frank (Birkenhead)	Macdonald, Calum
Fisher, Mark	McFall, John
Flynn, Paul	McKelvey, William
Foster, Rt Hon Derek	Mackinlay, Andrew
Foster, Don (Bath)	McLeish, Henry
Foulkes, George	Maclennan, Robert
Fraser, John	McMaster, Gordon
Fyfe, Maria	McNamara, Kevin
Galloway, George	MacShane, Denis
Gapes, Mike	Madden, Max
Garrett, John	Maddock, Mrs Diana
George, Bruce	Mahon, Alice
Gerrard, Neil	Mandelson, Peter
Gilbert, Rt Hon Dr John	Marek, Dr John
Godman, Dr Norman A.	Marshall, David (Shettleston)
Godsiff, Roger	Marshall, Jim (Leicester, S)
Golding, Mrs Llin	Martin, Michael J. (Springburn)
Gordon, Mildred	Martlew, Eric
Graham, Thomas	Maxton, John
Grant, Bernie (Tottenham)	Meacher, Michael
Griffiths, Nigel (Edinburgh S)	Meale, Alan
Griffiths, Win (Bridgend)	Michael, Alun
Grocott, Bruce	Michie, Bill (Sheffield Heeley)
Gunnell, John	Michie, Mrs Ray (Argyll Bute)
Hain, Peter	Milburn, Alan
Hall, Mike	Miller, Andrew
Hanson, David	Mitchell, Austin (Gt Grimsby)
Hardy, Peter	Moonie, Dr Lewis
Harman, Ms Harriet	Morgan, Rhodri
Harvey, Nick	Morley, Elliot
Hattersley, Rt Hon Roy	Morris, Rt Hon A. (Wy'nshawe)
Henderson, Doug	Morris, Estelle (B'ham Yardley)
Hendron, Dr Joe	Morris, Rt Hon J. (Aberavon)
Heppell, John	Mowlam, Marjorie
Hill, Keith (Streatham)	Mudie, George
Hinchliffe, David	Mullin, Chris
Hodge, Margaret	Oakes, Rt Hon Gordon
Hoey, Kate	O'Brien, Michael (N W'kshire)
Hogg, Norman (Cumbernauld)	O'Brien, William (Normanton)
Home Robertson, John	O'Hara, Edward
Hood, Jimmy	Olner, William
Hoon, Geoffrey	O'Neill, Martin
Howarth, George (Knowsley N)	Orme, Rt Hon Stanley
Howells, Dr. Kim (Pontypridd)	Parry, Robert

Patchett, Terry	Squire, Rachel (Dunfermline W)
Pendry, Tom	Steel, Rt Hon Sir David
Pickthall, Colin	Steinberg, Gerry
Pike, Peter L.	Stevenson, George
Pope, Greg	Stott, Roger
Powell, Ray (Ogmore)	Strang, Dr. Gavin
Prentice, Ms Bridget (Lew'm E)	Straw, Jack
Prentice, Gordon (Pendle)	Sutcliffe, Gerry
Purchase, Ken	Taylor, Mrs Ann (Dewsbury)
Quin, Ms Joyce	Thompson, Jack (Wansbeck)
Radice, Giles	Timms, Stephen
Randall, Stuart	Tipping, Paddy
Raynsford, Nick	Turner, Dennis
Redmond, Martin	Tyler, Paul
Reid, Dr John	Vaz, Keith
Rendel, David	Walker, Rt Hon Sir Harold
Robinson, Geoffrey (Co'try NW)	Wallace, James
Roche, Mrs. Barbara	Walley, Joan
Rogers, Allan	Wardell, Gareth (Gower)
Rooker, Jeff	Wareing, Robert N
Rooney, Terry	Watson, Mike
Ross, Ernie (Dundee W)	Welsh, Andrew
Rowlands, Ted	Wicks, Malcolm
Ruddock, Joan	Wigley, Dafydd
Salmond, Alex	Williams, Rt Hon Alan (Sw'n W)
Sedgemore, Brian	Williams, Alan W (Carmarthen)
Sheerman, Barry	Wilson, Brian
Sheldon, Rt Hon Robert	Winnick, David
Shore, Rt Hon Peter	Wise, Audrey
Short, Clare	Worthington, Tony
Simpson, Alan	Wray, Jimmy
Skinner, Dennis	Wright, Dr Tony
Smith, Andrew (Oxford E)	Young, David (Bolton SE)
Smith, Llew (Blaenau Gwent)
Snape, Peter	Tellers for the Ayes:
Soley, Clive	Mr. John Cummings and
Spearing, Nigel	Mr. Jim Dowd.
Spellar, John
NOES
Ainsworth, Peter (East Surrey)	Browning, Mrs. Angela
Aitken, Jonathan	Bruce, Ian (S Dorset)
Alexander, Richard	Budgen, Nicholas
Alison, Rt Hon Michael (Selby)	Burns, Simon
Allason, Rupert (Torbay)	Burt, Alistair
Amess, David	Butler, Peter
Ancram, Michael	Butterfill, John
Arbuthnot, James	Carlisle, John (Luton North)
Arnold, Jacques (Gravesham)	Carlisle, Sir Kenneth (Lincoln)
Arnold, Sir Thomas (Hazel Grv)	Carrington, Matthew
Ashby, David	Carttiss, Michael
Atkins, Robert	Cash, William
Atkinson, David (Bour'mouth E)	Channon, Rt Hon Paul
Atkinson, Peter (Hexham)	Churchill, Mr
Baker, Rt Hon K. (Mole Valley)	Clappison, James
Baker, Nicholas (Dorset North)	Clark, Dr Michael (Rochford)
Baldry, Tony	Clarke, Rt Hon Kenneth (Ruclif)
Banks, Matthew (Southport)	Clifton-Brown, Geoffrey
Banks, Robert (Harrogate)	Coe, Sebastian
Bates, Michael	Colvin, Michael
Batiste, Spencer	Congdon, David
Bellingham, Henry	Conway, Derek
Bendall, Vivian	Coombs, Anthony (Wyre For'st)
Beresford, Sir Paul	Coombs, Simon (Swindon)
Biffen, Rt Hon John	Cope, Rt Hon Sir John
Blackburn, Dr John G.	Couchman, James
Body, Sir Richard	Cran, James
Bonsor, Sir Nicholas	Currie, Mrs Edwina (S D'by'ire)
Booth, Hartley	Curry, David (Skipton & Ripon)
Boswell, Tim	Davies, Quentin (Stamford)
Bottomley, Peter (Eltham)	Davis, David (Boothferry)
Bottomley, Rt Hon Virginia	Day, Stephen
Bowden, Sir Andrew	Deva, Nirj Joseph
Bowis, John	Devlin, Tim
Boyson, Rt Hon Sir Rhodes	Dickens, Geoffrey
Brandreth, Gyles	Dicks, Terry
Brazier, Julian	Dorrell, Stephen
Bright, Graham	Douglas-Hamilton, Lord James
Brooke, Rt Hon Peter	Dover, Den
Brown, M. (Brigg & Cl'thorpes)	Duncan, Alan

Duncan-Smith, Iain	Kirkhope, Timothy
Dunn, Bob	Knapman, Roger
Durant, Sir Anthony	Knight, Mrs Angela (Erewash)
Dykes, Hugh	Knight, Greg (Derby N)
Eggar, Tim	Knox, Sir David
Elletson, Harold	Kynoch, George (Kincardine)
Emery, Rt Hon Sir Peter	Lait, Mrs Jacqui
Evans, David (Welwyn Hatfield)	Lamont, Rt Hon Norman
Evans, Jonathan (Brecon)	Lang, Rt Hon Ian
Evans, Nigel (Ribble Valley)	Lawrence, Sir Ivan
Evans, Roger (Monmouth)	Legg, Barry
Evennett, David	Leigh, Edward
Faber, David	Lennox-Boyd, Mark
Fabricant, Michael	Lester, Jim (Broxtowe)
Fairbairn, Sir Nicholas	Lidington, David
Fenner, Dame Peggy	Lightbown, David
Field, Barry (Isle of Wight)	Lilley, Rt Hon Peter
Fishburn, Dudley	Lloyd, Rt Hon Peter (Fareham)
Forman, Nigel	Lord, Michael
Forsyth, Michael (Stirling)	Luff, Peter
Forth, Eric	Lyell, Rt Hon Sir Nicholas
Fowler, Rt Hon Sir Norman	MacGregor, Rt Hon John
Fox, Dr Liam (Woodspring)	MacKay, Andrew
Fox, Sir Marcus (Shipley)	Maclean, David
Freeman, Rt Hon Roger	McLoughlin, Patrick
French, Douglas	McNair-Wilson, Sir Patrick
Fry, Sir Peter	Madel, Sir David
Gale, Roger	Maitland, Lady Olga
Gallie, Phil	Malone, Gerald
Gardiner, Sir George	Mans, Keith
Garel-Jones, Rt Hon Tristan	Marland, Paul
Garnier, Edward	Marlow, Tony
Gill, Christopher	Marshall, John (Hendon S)
Goodson-Wickes, Dr Charles	Martin, David (Portsmouth S)
Gorman, Mrs Teresa	Mates, Michael
Gorst, Sir John	Mawhinney, Rt Hon Dr Brian
Grant, Sir A. (Cambs SW)	Mellor, Rt Hon David
Greenway, Harry (Ealing N)	Merchant, Piers
Greenway, John (Ryedale)	Mitchell, Andrew (Gedling)
Griffiths, Peter (Portsmouth, N)	Mitchell, Sir David (Hants NW)
Grylls, Sir Michael	Moate, Sir Roger
Gummer, Rt Hon John Selwyn	Monro, Sir Hector
Hague, William	Moss, Malcolm
Hamilton, Rt Hon Sir Archie	Needham, Rt Hon Richard
Hamilton, Neil (Tatton)	Nelson, Anthony
Hampson, Dr Keith	Neubert, Sir Michael
Hanley, Jeremy	Newton, Rt Hon Tony
Hannam, Sir John	Nicholls, Patrick
Hargreaves, Andrew	Nicholson, David (Taunton)
Harris, David	Nicholson, Emma (Devon West)
Haselhurst, Alan	Norris, Steve
Hawkins, Nick	Onslow, Rt Hon Sir Cranley
Hawksley, Warren	Oppenheim, Phillip
Hayes, Jerry	Ottaway, Richard
Heald, Oliver	Paice, James
Heathcoat-Amory, David	Patten, Rt Hon John
Hendry, Charles	Pattie, Rt Hon Sir Geoffrey
Higgins, Rt Hon Sir Terence L.	Pawsey, James
Hill, James (Southampton Test)	Peacock, Mrs Elizabeth
Hogg, Rt Hon Douglas (G'tham)	Pickles, Eric
Horam, John	Porter, Barry (Wirral S)
Hordern, Rt Hon Sir Peter	Porter, David (Waveney)
Howard, Rt Hon Michael	Portillo, Rt Hon Michael
Howarth, Alan (Strat'rd-on-A)	Powell, William (Corby)
Howell, Rt Hon David (G'dford)	Rathbone, Tim
Howell, Sir Ralph (N Norfolk)	Redwood, Rt Hon John
Hughes Robert G. (Harrow W)	Renton, Rt Hon Tim
Hunt, Sir John (Ravensbourne)	Richards, Rod
Hunter, Andrew	Riddick, Graham
Jack, Michael	Rifkind, Rt Hon. Malcolm
Jackson, Robert (Wantage)	Robathan, Andrew
Jenkin, Bernard	Roberts, Rt Hon Sir Wyn
Jessel, Toby	Robertson, Raymond (Ab'd'n S)
Johnson Smith, Sir Geoffrey	Robinson, Mark (Somerton)
Jones, Gwilym (Cardiff N)	Roe, Mrs Marion (Broxboume)
Jones, Robert B. (W Hertfdshr)	Rowe, Andrew (Mid Kent)
Jopling, Rt Hon Michael	Rumbold, Rt Hon Dame Angela
Kellett-Bowman, Dame Elaine	Ryder, Rt Hon Richard
Key, Robert	Sackville, Tom
King, Rt Hon Tom	Sainsbury, Rt Hon Tim

Scott, Rt Hon Nicholas	Thompson, Patrick (Norwich N)
Shaw, David (Dover)	Thornton, Sir Malcolm
Shaw, Sir Giles (Pudsey)	Thurnham, Peter
Shephard, Rt Hon Gillian	Townend, John (Bridlington)
Shepherd, Colin (Hereford)	Townsend, Cyril D. (Bexl'yh'th)
Shersby, Michael	Tracey, Richard
Sims, Roger	Tredinnick, David
Skeet, Sir Trevor	Trend, Michael
Smith, Sir Dudley (Warwick)	Trotter, Neville
Smith, Tim (Beaconsfield)	Twinn, Dr Ian
Soames, Nicholas	Vaughan, Sir Gerard
Speed, Sir Keith	Viggers, Peter
Spencer, Sir Derek	Waldegrave, Rt Hon William
Spicer, Sir James (W Dorset)	Walden, George
Spicer, Michael (S Worcs)	Walker, Bill (N Tayside)
Spink, Dr Robert	Wardle, Charles (Bexhill)
Spring, Richard	Waterson, Nigel
Sproat, Iain	Watts, John
Squire, Robin (Hornchurch)	Wells, Bowen
Stanley, Rt Hon Sir John	Wheeler, Rt Hon Sir John
Steen, Anthony	Whitney, Ray
Stephen, Michael	Whittingdale, John
Stern, Michael	Wiggin, Sir Jerry
Stewart, Allan	Wilkinson, John
Streeter, Gary	Willetts, David
Sumberg, David	Wilshire, David
Sweeney, Walter	Wolfson, Mark
Sykes, John	Wood, Timothy
Tapsell, Sir Peter	Yeo, Tim
Taylor, Ian (Esher)	Young, Rt Hon Sir George
Taylor, John M. (Solihull)
Taylor, Sir Teddy (Southend, E)	Tellers for the Noes:
Temple-Morris, Peter	Mr. Sydney Chapman and
Thomason, Roy	Mr. Irvine Patnick.
Thompson, Sir Donald (C'er V)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments).

The House divided: Ayes 303, Noes 247

Division No. 293]	[10.15 pm
AYES
Ainsworth, Peter (East Surrey)	Brandreth, Gyles
Aitken, Jonathan	Brazier, Julian
Alexander, Richard	Bright, Graham
Alison, Rt Hon Michael (Selby)	Brooke, Rt Hon Peter
Allason, Rupert (Torbay)	Brown, M. (Brigg & Cl'thorpes)
Amess, David	Browning, Mrs. Angela
Ancram, Michael	Bruce, Ian (S Dorset)
Arbuthnot, James	Budgen, Nicholas
Arnold, Jacques (Gravesham)	Burns, Simon
Arnold, Sir Thomas (Hazel Grv)	Burt, Alistair
Ashby, David	Butcher, John
Atkins, Robert	Butler, Peter
Atkinson, David (Bour'mouth E)	Butterfill, John
Atkinson, Peter (Hexham)	Carlisle, John (Luton North)
Baker, Rt Hon K. (Mole Valley)	Carlisle, Sir Kenneth (Lincoln)
Baker, Nicholas (Dorset North)	Carrington, Matthew
Baldry, Tony	Carttiss, Michael
Banks, Matthew (Southport)	Cash, William
Banks, Robert (Harrogate)	Channon, Rt Hon Paul
Bates, Michael	Churchill, Mr
Batiste, Spencer	Clappison, James
Bellingham, Henry	Clark, Dr Michael (Rochford)
Bendall, Vivian	Clarke, Rt Hon Kenneth (Ruclif)
Beresford, Sir Paul	Clifton-Brown, Geoffrey
Biffen, Rt Hon John	Coe, Sebastian
Blackburn, Dr John G.	Congdon, David
Body, Sir Richard	Conway, Derek
Bonsor, Sir Nicholas	Coombs, Anthony (Wyre For'st)
Booth, Hartley	Coombs, Simon (Swindon)
Boswell, Tim	Cope, Rt Hon Sir John
Bottomley, Peter (Eltham)	Couchman, James
Bottomley, Rt Hon Virginia	Cran, James
Bowden, Sir Andrew	Currie, Mrs Edwina (S D'by'ire)
Bowis, John	Curry, David (Skipton & Ripon)
Boyson, Rt Hon Sir Rhodes	Davies, Quentin (Stamford)

Davis, David (Boothferry)	Jessel, Toby
Day, Stephen	Johnson Smith, Sir Geoffrey
Deva, Nirj Joseph	Jones, Gwilym (Cardiff N)
Devlin, Tim	Jones, Robert B. (W Hertfdshr)
Dicks, Terry	Jopling, Rt Hon Michael
Dorrell, Stephen	Kellett-Bowman, Dame Elaine
Douglas-Hamilton, Lord James	Key, Robert
Dover, Den	King, Rt Hon Tom
Duncan, Alan	Knapman, Roger
Duncan-Smith, Iain	Knight, Mrs Angela (Erewash)
Dunn, Bob	Knight, Greg (Derby N)
Durant, Sir Anthony	Knox, Sir David
Dykes, Hugh	Kynoch, George (Kincardine)
Eggar, Tim	Lait, Mrs Jacqui
Elletson, Harold	Lamont, Rt Hon Norman
Emery, Rt Hon Sir Peter	Lang, Rt Hon Ian
Evans, David (Welwyn Hatfield)	Lawrence, Sir Ivan
Evans, Jonathan (Brecon)	Legg, Barry
Evans, Nigel (Ribble Valley)	Leigh, Edward
Evans, Roger (Monmouth)	Lennox-Boyd, Mark
Evennett, David	Lester, Jim (Broxtowe)
Faber, David	Lidington, David
Fabricant, Michael	Lightbown, David
Fairbairn, Sir Nicholas	Lilley, Rt Hon Peter
Field, Barry (Isle of Wight)	Lloyd, Rt Hon Peter (Fareham)
Fishburn, Dudley	Lord, Michael
Forman, Nigel	Luff, Peter
Forsyth, Michael (Stirling)	Lyell, Rt Hon Sir Nicholas
Forth, Eric	MacGregor, Rt Hon John
Fowler, Rt Hon Sir Norman	MacKay, Andrew
Fox, Dr Liam (Woodspring)	Maclean, David
Fox, Sir Marcus (Shipley)	McLoughlin, Patrick
Freeman, Rt Hon Roger	McNair-Wilson, Sir Patrick
French, Douglas	Madel, Sir David
Fry, Sir Peter	Maitland, Lady Olga
Gale, Roger	Malone, Gerald
Gallie, Phil	Mans, Keith
Gardiner, Sir George	Marland, Paul
Garel-Jones, Rt Hon Tristan	Marlow, Tony
Garnier, Edward	Marshall, John (Hendon S)
Gill, Christopher	Martin, David (Portsmouth S)
Goodson-Wickes, Dr Charles	Mates, Michael
Gorman, Mrs Teresa	Mawhinney, Rt Hon Dr Brian
Gorst, Sir John	Mellor, Rt Hon David
Grant, Sir A. (Cambs SW)	Merchant, Piers
Greenway, Harry (Ealing N)	Mitchell, Andrew (Gedling)
Greenway, John (Ryedale)	Mitchell, Sir David (Hants NW)
Griffiths, Peter (Portsmouth, N)	Moate, Sir Roger
Grylls, Sir Michael	Monro, Sir Hector
Gummer, Rt Hon John Selwyn	Moss, Malcolm
Hague, William	Needham, Rt Hon Richard
Hamilton, Rt Hon Sir Archie	Nelson, Anthony
Hamilton, Neil (Tatton)	Neubert, Sir Michael
Hampson, Dr Keith	Newton, Rt Hon Tony
Hanley, Jeremy	Nicholls, Patrick
Hannam, Sir John	Nicholson, David (Taunton)
Hargreaves, Andrew	Nicholson, Emma (Devon West)
Harris, David	Norris, Steve
Haselhurst, Alan	Onslow, Rt Hon Sir Cranley
Hawkins, Nick	Oppenheim, Phillip
Hawksley, Warren	Ottaway, Richard
Hayes, Jerry	Paice, James
Heald, Oliver	Patnick, Irvine
Heathcoat-Amory, David	Patten, Rt Hon John
Hendry, Charles	Pattie, Rt Hon Sir Geoffrey
Higgins, Rt Hon Sir Terence L.	Pawsey, James
Hill, James (Southampton Test)	Peacock, Mrs Elizabeth
Hogg, Rt Hon Douglas (G'tham)	Pickles, Eric
Horam, John	Porter, Barry (Wirral S)
Hordern, Rt Hon Sir Peter	Porter, David (Waveney)
Howard, Rt Hon Michael	Portillo, Rt Hon Michael
Howarth, Alan (Strat'rd-on-A)	Powell, William (Corby)
Howell, Rt Hon David (G'dford)	Rathbone, Tim
Howell, Sir Ralph (N Norfolk)	Redwood, Rt Hon John
Hughes Robert G. (Harrow W)	Renton, Rt Hon Tim
Hunt, Sir John (Ravensbourne)	Richards, Rod
Hunter, Andrew	Riddick, Graham
Jack, Michael	Rifkind, Rt Hon. Malcolm
Jackson, Robert (Wantage)	Robathan, Andrew
Jenkin, Bernard	Roberts, Rt Hon Sir Wyn

Robertson, Raymond (Ab'd'n S)	Taylor, Sir Teddy (Southend, E)
Robinson, Mark (Somerton)	Temple-Morris, Peter
Roe, Mrs Marion (Broxbourne)	Thomason, Roy
Rowe, Andrew (Mid Kent)	Thompson, Sir Donald (C'er V)
Rumbold, Rt Hon Dame Angela	Thompson, Patrick (Norwich N)
Ryder, Rt Hon Richard	Thornton, Sir Malcolm
Sackville, Tom	Thurnham, Peter
Sainsbury, Rt Hon Tim	Townend, John (Bridlington)
Scott, Rt Hon Nicholas	Townsend, Cyril D. (Bexl'yh'th)
Shaw, David (Dover)	Tracey, Richard
Shaw, Sir Giles (Pudsey)	Tredinnick, David
Shephard, Rt Hon Gillian	Trend, Michael
Shepherd, Colin (Hereford)	Trotter, Neville
Shersby, Michael	Twinn, Dr Ian
Sims, Roger	Vaughan, Sir Gerard
Skeet, Sir Trevor	Viggers, Peter
Smith, Sir Dudley (Warwick)	Waldegrave, Rt Hon William
Smith, Tim (Beaconsfield)	Walden, George
Soames, Nicholas	Walker, Bill (N Tayside)
Speed, Sir Keith	Wardle, Charles (Bexhill)
Spencer, Sir Derek	Waterson, Nigel
Spicer, Sir James (W Dorset)	Watts, John
Spicer, Michael (S Worcs)	Wells, Bowen
Spink, Dr Robert	Wheeler, Rt Hon Sir John
Spring, Richard	Whitney, Ray
Sproat, Iain	Whittingdale, John
Squire, Robin (Hornchurch)	Wiggin, Sir Jerry
Stanley, Rt Hon Sir John	Wilkinson, John
Steen, Anthony	Willetts, David
Stephen, Michael	Wilshire, David
Stern, Michael	Wolfson, Mark
Stewart, Allan	Wood, Timothy
Streeter, Gary	Yeo, Tim
Sumberg, David	Young, Rt Hon Sir George
Sweeney, Walter
Sykes, John	Tellers for the Ayes:
Tapsell, Sir Peter	Mr. Sydney Chapman and
Taylor, Ian (Esher)	Mr. Timothy Kirkhope.
Taylor, John M. (Solihull)
NOES
Abbott, Ms Diane	Clelland, David
Adams, Mrs Irene	Clwyd, Mrs Ann
Ainger, Nick	Coffey, Ann
Allen, Graham	Cohen, Harry
Armstrong, Hilary	Connarty, Michael
Austin-Walker, John	Cook, Frank (Stockton N)
Banks, Tony (Newham NW)	Cook, Robin (Livingston)
Barnes, Harry	Corbett, Robin
Barron, Kevin	Corbyn, Jeremy
Battle, John	Corston, Ms Jean
Bayley, Hugh	Cousins, Jim
Beith, Rt Hon A. J.	Cox, Tom
Bell, Stuart	Cunliffe, Lawrence
Benn, Rt Hon Tony	Cunningham, Jim (Covy SE)
Bennett, Andrew F.	Cunningham, Rt Hon Dr John
Bermingham, Gerald	Darling, Alistair
Berry, Roger	Davidson, Ian
Blunkett, David	Davies, Bryan (Oldham C'tral)
Boateng, Paul	Davies, Ron (Caerphilly)
Boyes, Roland	Davis, Terry (B'ham, H'dge H'l)
Bradley, Keith	Denham, John
Bray, Dr Jeremy	Dewar, Donald
Brown, Gordon (Dunfermline E)	Dixon, Don
Brown, N. (N'c'tle upon Tyne E)	Dobson, Frank
Burden, Richard	Donohoe, Brian H.
Byers, Stephen	Dunwoody, Mrs Gwyneth
Caborn, Richard	Eastham, Ken
Callaghan, Jim	Enright, Derek
Campbell, Mrs Anne (C'bridge)	Evans, John (St Helens N)
Campbell, Ronnie (Blyth V)	Ewing, Mrs Margaret
Campbell-Savours, D. N.	Fatchett, Derek
Canavan, Dennis	Faulds, Andrew
Cann, Jamie	Field, Frank (Birkenhead)
Chisholm, Malcolm	Fisher, Mark
Church, Judith	Flynn, Paul
Clapham, Michael	Foster, Rt Hon Derek
Clark, Dr David (South Shields)	Foulkes, George
Clarke, Eric (Midlothian)	Fraser, John
Clarke, Tom (Monklands W)	Fyfe, Maria

Galloway, George	Madden, Max
Gapes, Mike	Mahon, Alice
Garrett, John	Mandelson, Peter
George, Bruce	Marek, Dr John
Gerrard, Neil	Marshall, David (Shettleston)
Gilbert, Rt Hon Dr John	Marshall, Jim (Leicester, S)
Godman, Dr Norman A.	Martin, Michael J. (Springburn)
Godsiff, Roger	Martlew, Eric
Golding, Mrs Llin	Maxton, John
Graham, Thomas	Meacher, Michael
Grant, Bernie (Tottenham)	Meale, Alan
Griffiths, Nigel (Edinburgh S)	Michael, Alun
Griffiths, Win (Bridgend)	Michie, Bill (Sheffield Heeley)
Grocott, Bruce	Milburn, Alan
Gunnell, John	Miller, Andrew
Hain, Peter	Mitchell, Austin (Gt Grimsby)
Hall, Mike	Moonie, Dr Lewis
Hanson, David	Morgan, Rhodri
Hardy, Peter	Morley, Elliot
Harman, Ms Harriet	Morris, Rt Hon A. (Wy'nshawe)
Harvey, Nick	Morris, Estelle (B'ham Yardley)
Hattersley, Rt Hon Roy	Morris, Rt Hon J. (Aberavon)
Henderson, Doug	Mowlam, Marjorie
Heppell, John	Mudie, George
Hill, Keith (Streatham)	Mullin, Chris
Hinchliffe, David	Oakes, Rt Hon Gordon
Hodge, Margaret	O'Brien, Michael (N W'kshire)
Hoey, Kate	O'Brien, William (Normanton)
Hogg, Norman (Cumbernauld)	O'Hara, Edward
Home Robertson, John	Olner, William
Hoon, Geoffrey	O'Neill, Martin
Howarth, George (Knowsley N)	Orme, Rt Hon Stanley
Howells, Dr. Kim (Pontypridd)	Parry, Robert
Hoyle, Doug	Patchett, Terry
Hughes, Kevin (Doncaster N)	Pendry, Tom
Hughes, Robert (Aberdeen N)	Pickthall, Colin
Hughes, Roy (Newport E)	Pike, Peter L.
Hutton, John	Pope, Greg
Illsley, Eric	Powell, Ray (Ogmore)
Ingram, Adam	Prentice, Ms Bridget (Lew'm E)
Jackson, Glenda (H'stead)	Prentice, Gordon (Pendle)
Jamieson, David	Purchase, Ken
Jones, Barry (Alyn and D'side)	Quin, Ms Joyce
Jones, Jon Owen (Cardiff C)	Radice, Giles
Jones, Lynne (B'ham S O)	Raynsford, Nick
Jones, Martyn (Clwyd, SW)	Redmond, Martin
Jowell, Tessa	Reid, Dr John
Kaufman, Rt Hon Gerald	Robinson, Geoffrey (Co'try NW)
Keen, Alan	Roche, Mrs. Barbara
Khabra, Piara S.	Rogers, Allan
Kilfedder, Sir James	Rooker, Jeff
Kilfoyle, Peter	Rooney, Terry
Kinnock, Rt Hon Neil (Islwyn)	Ross, Ernie (Dundee W)
Lestor, Joan (Eccles)	Rowlands, Ted
Lewis, Terry	Ruddock, Joan
Litherland, Robert	Salmond, Alex
Livingstone, Ken	Sedgemore, Brian
Lloyd, Tony (Stretford)	Sheerman, Barry
Llwyd, Elfyn	Sheldon, Rt Hon Robert
Loyden, Eddie	Short, Clare
McAllion, John	Simpson, Alan
McAvoy, Thomas	Skinner, Dennis
McCartney, Ian	Smith, Andrew (Oxford E)
Macdonald, Calum	Smith, Llew (Blaenau Gwent)
McFall, John	Snape, Peter
McKelvey, William	Soley, Clive
Mackinlay, Andrew	Spearing, Nigel
McLeish, Henry	Spellar, John
McMaster, Gordon	Squire, Rachel (Dunfermline W)
McNamara, Kevin	Steinberg, Gerry
MacShane, Denis	Stevenson, George

Strang, Dr. Gavin	Wicks, Malcolm
Straw, Jack	Wigley, Dafydd
Sutcliffe, Gerry	Williams, Rt Hon Alan (Sw'n W)
Taylor, Mrs Ann (Dewsbury)	Williams, Alan W (Carmarthen)
Thompson, Jack (Wansbeck)	Wilson, Brian
Timms, Stephen	Winnick, David
Tipping, Paddy	Wise, Audrey
Turner, Dennis	Worthington, Tony
Vaz, Keith	Wray, Jimmy
Walker, Rt Hon Sir Harold	Wright, Dr Tony
Walley, Joan	Young, David (Bolton SE)
Wardell, Gareth (Gower)
Wareing, Robert N	Tellers for the Noes:
Watson, Mike	Mr. Jim Dowd and
Welsh, Andrew	Mr. John Cummings.

Question accordingly agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House agrees with the Select Committee on Trade and Industry that the Post Office cannot be retained in its present form; therefore welcomes the publication of the Government's Green Paper on the future of postal services which acknowledges the need for greater commercial freedom for the Post Office and provides increased opportunities for sub-post offices; recognising the importance to communities of Post Office Counters and the Royal Mail, supports the Government's commitment to the universal service at a uniform and affordable tariff, with a nationwide network of post offices; condemns the approach that the only possible solution is 100 per cent. public ownership; and welcomes the opportunity of consultation on the range of options.