HC Deb 07 February 1996 vol 271 cc393-441
Madam Speaker

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

7.14 pm
Mrs. Margaret Beckett (Derby, South)

I beg to move, That this House opposes the Prime Minister's stated intention to reopen the question of the privatisation of Royal Mail and Parcelforce; records its concern that such a privatisation by Her Majesty's Government would threaten the close co-operation which exists between the Royal Mail, Parcelforce and Post Office Counters and places in commercial jeopardy post offices and sub post offices in communities where presently they play a vital role; believes that the Government should safeguard the universal access and uniform pricing of this country's postal services; recognises that the Post Office does not call for or receive a subsidy from the public purse; and is of the view that British customers will continue to have the best opportunity of enjoying this standard of service only if the Post Office remains as a single corporation within public ownership. One of the gravest charges that may be laid at the door of the present Government is that they have ceased to serve Britain's national interests. In fact it sometimes appears that, obsessed as they are by the Conservative party's interests and divisions, they have ceased even to recognise that such a thing as the national interest exists. In few areas of policy is that more blatantly the case than in their approach to the future and potential for development of Britain's Post Office.

It is not disputed, even by the Government, that our publicly owned and run Post Office is efficient, well run and profitable. Not only is it without subsidy, but it makes substantial contributions to the Exchequer. It is, in short, a public sector success story, and not only that but a British success story; but the Government steadfastly refuse to acknowledge that because it does not fit their blind ideology.

Nor is it disputed that, given the opportunity, the Post Office might further develop its commercial potential, with advantage to the public. The Post Office and the private sector believe that there is special potential advantage to be gained by successful public-private partnerships, which might readily be developed if Britain's Post Office were to be given the commercial freedoms enjoyed by similar organisations in other states of the European Union.

Under successive boards and chief executives, the Post Office has brought pressure to bear on the Government to take what appeared to most observers to be the requisite common-sense decisions. The response has been a blank rejection, accompanied by the dogmatic incompetence that is the Government's dubious hallmark.

As long ago as February 1994, representatives of the Post Office told the all-party Select Committee on Trade and Industry that there was a sense of approaching crisis due to indecision about the future of the Post Office. By then, its structure had been under review since July 1992. Post Office management, the work force, the Select Committee and even, it seems to me, some of the private sector competitors of the Post Office all seemed to believe that the Post Office was being messed about by the Government to the detriment of its ability to deliver its present services and of its competitive potential.

In June 1994, after that two-year review, the Government finally produced their Green Paper, in which they explicitly endorsed the opinion, expressed in the Select Committee report, that the Post Office cannot be retained in its present form". Three options were discussed. They were full privatisation, commercial freedom without a change of ownership in the public sector, and splitting up of the Post Office accompanied by partial privatisation—the Government's preferred option.

No mention had been made of the privatisation of the Post Office—a major piece of policy—in the 1992 Conservative general election manifesto. In fact, as my hon. Friend the Member for Livingston (Mr. Cook) pointed out, even Margaret Thatcher ruled out privatisation of the Post Office, saying: I have indicated that the Royal Mail would not be privatised. People feel very strongly about it, and so do I. It became obvious, however, as soon as the Government had made their proposals, that the chief, if not almost the only, beneficiaries would be the City institutions and advisers on whom the Government have lavished so many millions of taxpayer's money, and that the chief losers would be the public, whose money was being spent, and especially members of the public for whom the local post office or the postal services represent a lifeline. The Labour party and the Post Office unions set in train a strong public campaign which received an equally strong public and parliamentary response. Then, as now, it showed that the Government are completely out of touch with public opinion. Of nearly 16,000 responses to the Green Paper, only 60 favoured privatisation. The Government were forced to back down and their resentment was evident—I do not think that it is too much to say that they sulked. However, it appeared that the Government had accepted—with much bad grace— the rejection of their proposals.

As they had been forced to acknowledge that there should be change if the Post Office were to continue to be at the leading edge in the development of communication services, pressure mounted afresh on the Government to accept reality and to allow the greater commercial freedoms from which the Post Office has clearly demonstrated it can benefit. A further report from the all-party Select Committee in January 1995 made such a recommendation. It also said: The continuing uncertainty over the future of the Post Office benefits no-one except foreign competitors". The Select Committee's next point was even more relevant. It stated: Whatever the Government's response, it is essential that a clear statement be made, either that specific changes will be adopted and implemented without delay or that there will be no change in the status of the Post Office for the foreseeable future". The Select Committee went on to call for stability so that the Post Office could get on with developing its services.

For a brief halcyon period it looked as though at least a little sanity had set in. In May 1995, the then Secretary of State—I beg his pardon, I mean the President of the Board of Trade and Secretary of State for Trade and Industry—the present Deputy Prime Minister and First Secretary of State, who might be thought, in view of all those titles, to be speaking for the Government of which his membership is described in such exhaustive terms, told the House that the Government had, in effect, accepted representations from the Post Office that the scale of its contributions to Treasury coffers was hindering its ability to invest and almost wiping out its profits. He said that a fairer level of return would allow the Post Office to finance investment in new technology, which would enhance both productivity and competitiveness.

On 11 May 1995 the right hon. Member for Henley (Mr. Heseltine) responded to the Trade and Industry Select Committee's call for an EFL set by reference to an agreed percentage of planned profits". He suggested that the Government's previous practice of milking the Post Office for revenue to the detriment of the service it might provide would cease—or at least that is what those who heard him thought that he told the House. He said: I am prepared to agree that in future we shall aim to set the EFL at about half the Post Office's forecast post-tax profit. I hope to make progress in that direction this autumn. That would have still resulted in a contribution from the Post Office to the Exchequer of about £172 million this financial year. The right hon. Gentleman went even further and said that, because the Government wanted to discuss arrangements with the management of the Post Office for a more stable relationship in the future … we have attempted to quantify, within the constraints that I have set out, what that EFL might look for in the future".—[Official Report, 11 May 1995; Vol. 259, c. 885–87.] As late as September 1995, the right hon. Gentleman commissioned KPMG Management Consulting to produce a report after plans for privatisation had been abandoned. The report, which was leaked to the Financial Times, was said to agree on the value and effect of such investment and to suggest that it would open up the possibility that postal charges would not have to rise until the end of the century. That would benefit the public and commercial users of the Post Office, as well as making it far more competitive.

Then came last November's Budget, when the Government announced a change in the financing arrangements for the Post Office. Without consultation even with the Post Office board, the Chancellor announced that, on top of the £1.25 billion that the Post Office has contributed to the public purse over the past 10 years, it is to contribute a further £900 million—almost as much again—over the next three years alone. That is almost £1 million a day. As the Post Office pointed out, that was the biggest Government financial demand in its history, which followed hard on the heels of the biggest Government financial demand on British taxpayers levied in recent Budgets.

Mr. Edward Leigh (Gainsborough and Horncastle)

I am very interested in what the hon. Lady is saying. Will she commit a future Labour Government to taking only half the profits of the Post Office if it were under their control?

Mrs. Beckett

At the moment we are concerned with the policy of the Government. We shall have to review a whole range of matters—some of which may be raised later in the debate—about the future policy of the Post Office should we be successful at the next general election. In the meantime and for the next three years— which takes us to the deadline for the next general election—the Post Office will be milked of its profits. Does the hon. Member for Gainsborough and Horncastle (Mr. Leigh) support that policy or will he support us in the Lobby tonight? He is clearly interested in these matters, as he said a moment ago. Does he support the Government's policy? I look forward to seeing him in our Lobby tonight; I am sure that that was the purport of his intervention.

As I said, almost £1 million will be extracted from the Post Office every day. The Post Office has made a record-breaking profit, yet when it has paid the levy and its corporation tax, it could end up in the red. Once again, most of us will lose. It is not enough that the Government's general tax increases since 1992 are still equivalent to 6p on the basic rate of tax for a typical family. Now the people of this country must pay another Tory tax in the form of higher postal charges—a "stamp tax"—because that is inevitably how most of the cash demand will have to be financed.

Furthermore, British business will face another tax, as business users of our postal services have pointed out. I do not know whether the Secretary of State has seen the most recent issue of The House Magazine, but I draw his attention to a joint advertisement which contains quite a plain message from business users of Post Office services. They point out that, as a result of the Government's policies, jobs will be lost in their industries. They, too, no longer feel safe with the Tories.

The Post Office board is faced with complete disruption of its financial management entirely out of the blue. Its chances of beating off competition from other European Union countries are seriously diminished. The folly of the decision is not all that is remarkable. It is clearly an abrupt and a complete reversal of the policy announced less than six months previously by the right hon. Member for Henley, the Deputy Prime Minister.

This shabby little episode shows once again how dangerous it is to rely on anything that Ministers say. Faced with the contradiction between those assurances and the Government's actions, the Secretary of State could mutter only that his predecessor had said it was "an aim" to move in that direction, rising magnificently above the clear evidence that the Government have lurched in the opposite direction.

Now we have the final stupidity of yet another lurch to the right. Speaking on the "Breakfast with Frost" programme, the Prime Minister told the nation that, if re-elected, the Government would embark yet again on the dogmatic and unnecessary folly of Post Office privatisation. That is yet another example of why the Post Office, like Britain's future, is not safe in the Government's hands.

The Labour party rejects privatisation of the Post Office. It is unnecessary because the Post Office is already achieving standards that are the envy of the world, despite the difficulties that the Government place in its path. Privatisation would undermine the public service ethos of the Post Office, which is one of the reasons why it has achieved those high standards. Under the Conservatives, consumers can expect a postal charge increase, the sell-off of Crown post offices without proper public consultation, and the privatisation of Royal Mail and Parcelforce. Those policies are bound to lead to a threat to the high standards of postal service that we now enjoy, with postal deliveries to all parts of Britain at a common price.

That is not just evidence of the Government's neglect of Britain's commercial interests if it conflicts with that which the right of the Conservative party wants to hear or of the degree to which the Government are out of touch even with their own supporters. More gravely, it shows that the Government utterly fail to understand that public services such as the railways or the Post Office do not just underpin the community but help to create community— especially in rural areas. They are services without which communities cannot survive.

Opinion polls consistently show great public support for the Post Office and concern at the threat to its future posed by Government policies. In recent months, many Conservative Members have registered their concerns about post office closures, and those of Crown offices in particular.

The Government's case for privatising services such as the Post Office is that commercial freedom is incompatible with the service's place in the public sector. That is just the kind of commercial freedom that the Government have been prepared to offer other public sector organisations. The most recent example is the BBC, but there are others. When the right hon. Member for Henley came under pressure when giving evidence to the Select Committee on that point, his argument seemed to terminate with the fact that it would be a matter of policy, as to whether or not commercial freedom for the Post Office could be undertaken—and as it was not Government policy, it was therefore impossible. That circular and self-satisfying argument clearly does not address the case.

The Government's other argument is neatly self-fulfilling—that privatisation is necessary because Government interferes in a public sector Post Office to its disadvantage. They claim that the way to protect the Post Office from the Government's incompetence, stupidity and short-sightedness is to remove the Post Office from their control. At last, we are on common ground. However, the way to protect the Post Office is not to put it in the private sector but to put the Government out of power.

7.31 pm
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: welcomes the substantial benefits which have flowed to customers from the Government's programme of privatisation; recognises that 19,000 of the 20,000 post offices in the United Kingdom are already in the private sector; and endorses the Government's continuing commitment to a universal postal service at a uniform and affordable tariff and a nationwide network of post offices.". This evening's debate was trailed as being about the "threat" of Post Office privatisation. The word "threat" begs a large question. As I shall now show, before I deal with the specific issues of the Post Office, privatisation does not represent a threat. On the contrary, it provides the conditions for enterprise and success— the enterprise of the market and the rigour of competition", to quote the Labour party's new clause IV.

The privatisation programme is one of the great successes of this enterprising Government. The only threat that it presents is to the cherished but discredited dogma of nationalisation that is central to the beliefs of many in the Labour party. We were told that new clause IV was meant to signal a change of heart by the Labour party. We knew that the right hon. Member for Derby, South (Mrs. Beckett) thought differently. Before clause IV was changed, the right hon. Lady said: I am not against Clause IV. She said also: And changing it would give the wrong signal to the party. She went on to say that there were circumstances in which I would want to see a return to public ownership—for example, in the water industry. Perhaps the right hon. Lady can explain. Will that feature in Labour's election manifesto? Is nationalisation back on the agenda? Or is no one paying any attention to the right hon. Lady?

The motion for today's debate gives the lie to Labour's attempts to portray a change in attitude. Even the late Leader of the Opposition was far more enlightened than his party seems to be today. He told us, "Ownership is irrelevant." Clearly not in Labour's stakeholder economy. Continuing to parrot their opposition to privatisation and extolling the benefits of state control would appear to be integral to stakeholding. After the successes of our privatisation programme, however, it is not now so much about controlling the commanding heights as about the commanding stakes. Who is going to be holding them?

We know all about the trade unions—those great upholders of principle who condemn privatisation while they make a tidy profit on the back of the success of privatised industries and then, no doubt, use those resources to help sponsor Labour Members of Parliament who they put up to oppose privatisation. There is no doubt either that that is Labour's idea of a virtuous circle.

If there is a threat to our economy, it comes not from privatisation, which taken as a whole has dramatically enhanced our economic performance, but from the right hon. Lady who supported Arthur Scargill and his striking miners, backed the "resolve" and "fortitude" of the Wapping strikers, wanted to keep clause IV, called for a return to secondary picketing, backs a national minimum wage, supports the social chapter, wants a training tax on industry and would clearly revel in some meddlesome stakeholding. The real threat to the Post Office would come if the right hon. Lady and her trade union friends ever got a chance to put that agenda into practice.

Privatisation has brought many benefits. They include benefits to the taxpayer from revenues totalling almost £60 billion and the £55 million in corporation tax that is paid to the Exchequer each and every week—where before, nationalised industries cost £50 million a week. It has brought benefits to customers. BT's prices are down by 40 per cent., gas prices are down by 23 per cent. and electricity prices are down by 7 per cent—all after taking inflation into account.

Mr. Michael Connarty (Falkirk, East)

It is clear to everyone that the external financing limit set by the Government is about to put up prices in the Post Office. May we return to the Government's hand in the Post Office, which is taking so much from that service's investment plans?

Mr. Lang

In due course. I am talking about the benefits of privatisation. It brings benefits to employees, who have been given the opportunity to own shares in their companies. Ninety-five per cent. of BT's employees took that opportunity, as did nine out of 10 British Aerospace employees. Labour would have denied them that opportunity, just as it would deny that opportunity to the employees of British Energy and Railtrack. Seven million more shareholders today have a stake—a real stake—in British industry. Labour says that it supports wider employee share ownership, while opposing it at every turn. It is yet more of the say one thing, do another politics of the Labour party.

The motion talks about the threat of privatisation. Perhaps Labour Members should visit some of the industries that we have privatised. Try telling British Aerospace, which is now the UK's largest industrial exporter and the largest defence contractor in Europe, about that threat. Try telling British Airways, which is now the most profitable airline in Europe and one of the most profitable in the world, about the threat. Rolls-Royce has more than tripled its share of the world's civil aeronautical engine business since privatisation. British Steel is now one of the most efficient steel producers in the world, exporting half its output. Try telling those companies about the threat of privatisation. It is nonsense, and ideological nonsense at that. All those companies have seen privatisation as an opportunity, and acted on it—and our economy has been the main beneficiary.

The debate so far has illustrated once again the Opposition's reluctance to face reality about the future of the Post Office and postal services in the UK. They take refuge in complacency, distortion of the arguments and whipping up unfounded fears about the future provision and level of postal and Post Office services. The Government's position and policy on the Post Office is clear. The Green Paper "The Future of the Post Office", published in June 1994, set out the case for changes that we believe will be necessary in the not too distant future if the Post Office is to remain successful in the face of the threats and opportunities that all its main businesses must face.

Ms Judith Church (Dagenham)

If the Secretary of State felt that Post Office privatisation was such a good idea in 1994, why did the Government not proceed with it then, or include such a proposal in the Queen's Speech for this Session?

Mr. Lang

It is well known that the Government decided that there was insufficient parliamentary support, so pursued an alternative course in the interim.

The competition is growing and includes the fax, the telephone, electronic mail, couriers, British private sector companies that can be seen on the streets every day, such as Securicor and Business Post, foreign companies that run giant international delivery networks, such as DHL, Federal Express, UPS and TNT, and the privatised Dutch postal services. No doubt other countries' postal services are on the way.

Although it has not proved possible to move forward with changes in this Parliament, the Government have never sought to conceal their view that a future change to some form of private sector status for major elements of Post Office business is essential to remove the public sector constraints that inhibit its prospects.

The Opposition motion is completely misguided when it talks of the privatisation of the Post Office, as it ignores the fact that 19,000 of the 20,000 post offices in the United Kingdom are already in the private sector. They are private businesses already. Far from being a threat, they are the backbone of the industry and the lifeblood of many small communities all over the country.

The Government set out in the June 1994 Green Paper proposals for the changes that would enable the Post Office to meet the major challenges it will face over the next decade. Our preferred option was to move to joint ownership by the Government, the public and employees of Royal Mail and Parcelforce. Under that option, a retained Government share stake of 49 per cent. would maintain a close link between the Government and Royal Mail, safeguarding the interests of consumers in essential public services while giving the business the commercial freedom it needs to respond to increasing competition and to develop new services for the benefit of consumers.

The Government concluded that the strength of the Post Office network lies in the existing public and private partnership which combines national provision for the size and activities of the network with local private sector provision for the delivery of services to customers.

No change to the ownership or structure of Post Office Counters was therefore proposed. This option had the support of the Federation of Sub-Postmasters. I remind the House of what it said: The Federation warmly welcomes and supports the majority of the Government's proposals for the Counters Business and we see them, together with the commitment to retain Benefits Agency work at Post Office counters as critical for the future of sub-post offices. In the absence of the necessary level of support in the House to proceed with legislation to advance our preferred option for Royal Mail and Parcelforce, the Government set out last May, in the statement by my predecessor and right hon. Friend the Deputy Prime Minister, to which the right hon. Lady referred, a number of pragmatic changes in the financial regime of the Post Office which I shall address shortly.

The Government remain of the view, however, that the proposals I have described for the Royal Mail and Parcelforce would be in the best interests of the Post Office and its customers. It is in that context that, in a recent television interview, my right hon. Friend the Prime Minister indicated that consideration would be given to including proposals in our manifesto for the next election. This means no more and no less than it says.

Whatever the Government decide in due course to propose in our manifesto, I emphasise once again that the Government have an absolute and non-negotiable commitment to a universal letter and parcel service with a delivery to every address in the United Kingdom within a uniform and affordable tariff structure and a nationwide network of post offices. That has been, and always will be, central to any proposal for change.

Sir David Mitchell (North-West Hampshire)

Will my right hon. Friend comment on the suggestion that the ability to service all addresses, including many in rural areas that cost the Post Office a great deal to reach, is best safeguarded by the continuation of an expanding and profitable Post Office business which in turn can best be achieved in the private sector?

Mr. Lang

My hon. Friend has an extremely sound and valid point and I take serious account of it.

Mrs. Beckett

I do not want to detain the Secretary of State, but in view of his hon. Friend's intervention just now I remind him that he seems to have overlooked the phrase in the evidence given by the Federation of Sub-Postmasters which states: The Federation remains of the view that ownership should not be at the forefront of Government consideration, the key issue … being the need to improve the commercial prospects of the network.

Mr. Lang

The federation is involved with ownership of sub-post offices, 19,000 out of 20,000 of which are in the private sector already. That is the point the right hon. Lady seems unable to grasp.

I have already referred to the threats and opportunities that face the Post Office, such as fax machines, electronic mail and the telephone. Real costs in these areas are falling fast, making them even more competitive. Changes are necessary to enable Royal Mail to respond to the challenges and opportunities it faces. It is increasingly clear that the present public sector approach is not flexible enough to allow the management to respond properly to the competitive pressures. The all-party Trade and Industry Committee's report of 1994 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. As has been demonstrated time and again, flexibility to meet and respond to the stimulus of competitive challenge and, indeed, the broadening of competition which follows privatisation bring valuable and tangible benefits to consumers and the businesses alike.

Mr. Nigel Spearing (Newham, South)

A constituent of mine might tell me that the competitors to a future privatised Post Office will still be around and that the Post Office technology and innovation of the past decade will still be around, and ask what is the problem with the restrictions in the public sector. Why not let the Post Office do what it wants to, as it asked the Select Committee to be allowed to do but was refused by the Government?

Mr. Lang

It is typical of the Labour party that its members see no disadvantage in allowing a subsidised public sector corporation to compete on an unfair basis with the private sector. Of course we shall consider expanding the activities of the Post Office, but not in ways that would displace the private sector and distort competition, thus damaging the interests of consumers.

Mr. Connarty

Will the President give way?

Mr. Lang


In his statement to the House last year, my right hon. Friend the Deputy Prime Minister set out a number of changes relating to the financial control regime of the Post Office which sought to balance the realities of the Post Office's continuing public sector status with the need for commercial freedoms without undermining the Government's economic and competition responsibilities.

Mr. Charles Hendry (High Peak)

Was my right hon. Friend as surprised as I was to hear the right hon. Member for Derby, South talking about the Labour party's commitment not to interfere in the commercial freedom of the Post Office? Was he aware that the deputy leader of the Labour party recently visited my constituency and said that a future Labour Government would intervene and decide on the location of individual post offices, which goes far beyond the powers that Post Office Counters currently has? Does not that show that the Labour party remains committed to intervention to a degree unknown before in peace time, and would willingly tear up legally binding contracts if that suited its purposes?

Mr. Lang

My hon. Friend makes the point very well. The Labour party says one thing and does another. It claims that it would give the Post Office commercial freedom—[Interruption.] The hon. Member for Edinburgh, South (Mr. Griffiths) is getting there slowly. The Opposition say they would give it freedom to borrow in the markets, and freedom to enter new markets. In doing so, they choose to ignore the constraints of the public sector. Do they seriously believe that a public sector Post Office can be permanently ring-fenced from the constraints and pressures on public expenditure? Perhaps the Labour party could explain exactly what commercial freedoms it would give the Post Office that it does not already have?

My right hon. Friend has proposed a pragmatic and balanced package for the Post Office and the public, providing a responsible and coherent way forward which, as far as the very real constraints and financial disciplines of the public sector will allow, gives the Post Office greater flexibility and scope to extend its activities into adjacent markets.

The May 1995 statement, in recognition of the importance of maintaining a viable network of post offices, confirmed the Government's commitment to offering the services of almost 20,000 post offices to a wider range of clients. Among the new services now available or being trialled at post offices are free payment of gas bills, sale of national lottery tickets and travel insurance and bureau de change services. These and other developments in the future should help to strengthen the network of post offices, not least in rural areas where they play such an important part in the life of local communities.

The May statement also set out a number of changes to be introduced in the financial regime of the Post Office, including the external financing limit. Many of the changes have been implemented: earlier restrictions on capital expenditure have been abolished, a new corporate planning process is in place and we are open to proposals for new business from Post Office Counters and moves into adjacent market areas by Royal Mail in partnership with the private sector.

I recognise, of course, the Post Office's disappointment that it has not yet been possible to make progress towards our aim of setting the EFL at about half the forecast post-tax profits, but the statement made it absolutely clear that no responsible Government could ring-fence the Post Office entirely from the pressures on public spending. We do, however, recognise the difficulties the Post Office faces in forecasting and financial planning to achieve precisely the EFL targets that it is set. We are, therefore introducing some additional flexibility in response to its request, and we shall in future allow it to match an over-achievement, by up to £30 million, of one year's EFL with a reduction in the following year's target.

The right hon. Lady has been quick to criticise this year's EFL settlement. Perhaps she would tell us, as she was asked to do, what she would have done. If she had taken a different approach, what cuts in spending would she have made instead? Or would the money have been raised through higher taxes? In reaching its decisions on the Budget requirements last autumn, the Government were faced by the need to strike a balance between the needs of publicly financed services such as health and education and those of a public corporation such as the Post Office.

The Post Office EFLs must be seen in their proper context. The Post Office is a very successful and profitable business, but it is also a partially protected monopoly organisation, owned by the taxpayer, with an income of more than £15 million a day. In recent years, its capital investment has been running at well over £300 million a year—an historically high level and twice the rate in real terms of 15 years ago—and it should have scope to continue to invest both from its own financial resources and through private finance initiative projects. However, the Government's long-term aim is still to move towards setting the Post Office EFL at about half forecast post-tax profits.

It is worth noting that, in the last five years of Labour government, the Post Office was allowed to undertake capital expenditure of £800 million at today's prices. Under the last five years of Conservative government, the Post Office has invested £1.7 billion—more than double in real terms the figure under Labour. That is an illustration of the fraudulence of claims that increases in Post Office EFLs in recent years have starved it of capital investment.

It is for the Post Office in the first instance to present a specific proposal on the amount and timing of any tariff increase that it believes will be necessary. We shall study its proposal carefully, as will the Post Office Users National Council, which the Post Office is statutorily required to consult on tariff changes.

The Post Office has undertaken to maintain the existing level of postal charges until at least 31 March this year. By then, it will have been almost two and a half years since the last letter tariff increase. Customers are currently enjoying the longest period of stability in stamp prices since the late 1960s, but with an enormous improvement in the quality of service in recent years. The last letter tariff increase was in November 1993, and stamp prices continue to fall in real terms. At the same time, service standards remain at very high levels. Nationally, some 92 per cent. of first-class mail is delivered the next day, and over 98 per cent. of second-class mail is delivered within three days. By international standards, British letter tariffs represent very good value for money in terms of cost and quality of service.

I am aware of the concern—mentioned by the right hon. Member for Derby, South—in the direct marketing, printing, publishing and other industries that rely heavily on the mail service about the impact of an increase in letter tariffs. In the past 10 years, the volume of mail posted has increased by more than 40 per cent., with increases in each consecutive year. Recent evidence does not suggest, therefore, that a modest tariff increase has any significantly adverse effect on mail traffic—and I would point out that letter tariffs are currently lower in real terms than they were in 1979.

Today the right hon. Member for Derby, South has sought to claim that her party would give the Post Office more commercial freedom. Do she and her party support Crown conversions? If so, someone should have bothered to tell the deputy leader. On a recent visit to Glossop, the right hon. Member for Kingston upon Hull, East (Mr. Prescott) is reported in the Glossop Chronicle as saying that Labour's policy would be to stop Crown conversions—and, indeed, to reverse them in some cases. According to Labour, that is greater commercial freedom. Yet again, the Labour party says one thing and does another.

There is not even any reason to intervene; no doubt that is what appeals to Labour. According to independent surveys commissioned by the Post Office, customer satisfaction levels are higher for converted offices than for Crown offices. Recent surveys of 42 franchise offices around the country also show that customers perceive significant improvements in service over the Crown offices that they replaced. The customer is happy, the Post Office is happy, but never let it be said that Labour lets reason overcome ideology.

Of course, the reality is that Labour would never give the Post Office greater commercial freedom. Labour wants to intervene in the commercial decisions of the private sector, let alone those businesses unfortunate enough to be left stranded in the public sector should it ever win power again.

Mr. Jimmy Wray (Glasgow, Provan)

Why has there been a 33 per cent. increase in the industry's productivity over the past 10 years? Last year it made a profit of £472 million, an increase of £306 million on the previous year's figure. Why are the Government demanding £925 million, as against the £534 million demanded in previous years? They are bankrupting the Post Office.

Mr. Lang

I welcome the improvements in efficiency made by the Post Office in recent years, which it has been able to make as a result of the benign and efficient Government who have been in charge of its affairs since 1979. However, it remains a publicly owned corporation in the public sector, which cannot be exempt from the rigours of public expenditure constraints from time to time.

The real threat to the Post Office lies in tying it indefinitely into public sector constraints and scaremongering about privatisation. The real danger lies in the policies and postures of the Labour party. At the heart of the Government's policy are the three non-negotiable commitments to which we are pledged, and which the public rightly see as essential: a universal service for letters and parcels, a uniform tariff structure and a nationwide network of post offices.

It is in everyone's interests to have an efficient and effective Post Office that can respond confidently and successfully to the many challenges it faces. We have said how we believe it should be achieved; all that the Opposition can do is whinge.

7.54 pm
Ms Judith Church (Dagenham)

I am sponsored by the Union of Communication Workers, which assists me in the employment of my researcher and from which I receive no personal financial gain.

It is frustrating to have to return to the subject of the maiden speech that I made 18 months ago, in an attempt to dissuade the Government from their current foolish course. Moves to reopen the Post Office privatisation issue reveal the vacuum at the heart of their policy.

Turning on the "Breakfast with Frost" programme on 7 January, I was amazed to hear the Prime Minister say— this was mentioned by my right hon. Friend the Member for Derby, South (Mrs. Beckett)— we will look again and see whether that is a subject for the next Parliament when we come to look at the manifesto. I can hardly believe that—after the climbdown of the former President of the Board of Trade, and the huge hole left in the Queen's Speech for this Session of Parliament, the Government are now scratching around for measures to put in their manifesto for the next election. I can hardly believe that they think for one moment that privatisation of the Post Office will be popular with the people. If the Government really believe that, and intend to put it in their manifesto—I note that the Secretary of State made no commitment in that regard—they are more out of touch with the views of the people than even I believed.

The Government's approach to the issue of Post Office privatisation has been characterised throughout by ideological dogmatism, intellectual myopia and economic incompetence. Their approach underlines their failure to heed the democratic decisions of the House and the voice of the people. They persist in a sterile argument about ownership, while ignoring the substantive issues of efficiency and competitiveness that were dealt with today by my right hon. Friend the Member for Derby, South.

The most remarkable aspect of the whole issue is the fact that the only impediment to the greater success of the Post Office is the Government. Over the past 10 years, the Post Office has contributed £1.25 billion to the Treasury; as my right hon. Friend said, over the next three years the Government intend it to contribute nearly £1 billion more. It is unbelievable that the Government should talk of profitability and enterprise in public, while doing their best to strangle one of the country's finest corporations—a public corporation with a proven track record of 19 successful years of subsidy-free profit.

The recent radical increase in the negative external financing limit not only contradicts the Government's previous statements—as my right hon. Friend pointed out—but threatens to put the Post Office in the red for the first time in 20 years. If ever there was a case of, "Do as I say, not as I do," this is it.

I suppose that we should not be surprised at the Government's continued duplicity following, as it does, the recent advice by the Deputy Prime Minister on late payment wheezes, the string of broken tax promises and the hypocrisy on crime figures. The Government have been a tragedy for Britain and they want to compound that tragedy by damaging our Post Office, which is such a vital part of this nation's life.

In rural areas, the Post Office provides a valued focus for community life. That may not mean much to the Government, oblivious as they are to the fragmentation of communities after 17 years of their policies, but Labour understands the relevance and value of cohesive communities to the nation's overall economic success.

What the Government do not seem to understand is that the nation derives a social return from the present operation of the Post Office that could not be gained from a privatised entity concerned solely with private profitability. That aspect of public service, married with efficiency, represents the cornerstone of the Post Office's success and its popular support.

Labour's alternative draws on a true belief in the ability of public enterprise to develop the vast potential of this successful British corporation. By removing the current capital expenditure limits, we shall allow the Post Office true freedom to plan for the future and invest to the optimum to meet its requirements. The Post Office will then have access to the scope and flexibility of options offered by the world's capital markets. Similarly, there must be a greater liberty from interference from the Department of Trade and Industry in proposed trading projects and a new freedom to enter joint ventures.

Mr. Bernard Jenkin (Colchester, North)

If the hon. Lady was running a private courier or parcel delivery company and found herself facing competition from a nationalised Post Office that was released from the constraints of the public sector and, therefore, able to invest capital, underwritten by the state, without risk, in businesses to undercut the hon. Lady's own business, would she regard that as fair competition, or would she go on taking advice from the right hon. Member for Derby, South (Mrs. Beckett)?

Ms Church

It is amazing that the hon. Gentleman should enunciate such a view. It is clear that he has not read the Select Committee's report or followed the arguments put forward by the Post Office about greater commercial freedom and the sort of investments that it would wish to make. I advise him to do a lot more homework on the subject.

The Post Office must be allowed to preserve its competitive edge and evolve efficiently in the rapidly globalising communications market. Otherwise, 10 years from now we could be faced with the failing corporation which, judging by the Government's actions, they seem to wish they had now.

In responding to Labour's proposals for the Post Office, the Government usually justify their approach in two ways. We have heard those arguments in part today and I am sure that we shall hear more of them later in the debate.

The first concerns the tyranny of an accounting convention and a political view that is so short-termist that it makes a goldfish seem attentive. The Government have been holding back investment in the Post Office on the ground that it would show up as an increase in the public sector borrowing requirement. Debt is, of course, a serious problem and not to be taken lightly by any Labour Member, but surely even the Government can see that investment, from which will be derived a future income stream, is qualitatively different from spending, which has no direct revenue return.

At the moment, we are in the crazy situation where all spending is regarded as bad regardless of the fact that the future income created would help to reduce debt. What is clearly needed is basic common sense, greater transparency and a more long-term approach to the Government's finances.

The other reason that the Government give for rejecting Labour's approach concerns the role of the state, to which the Secretary of State has already referred this evening. There are two related points—protecting taxpayers from private sector risk and protecting the private sector from the unfair competition of a state-backed company. Unfortunately, that view is based on the fundamentally flawed premise that a clear line can easily be drawn between state activity and private sector activity. It may well be that in the minds of the think tank-dwelling Conservatives that that is how the world works, but out in the real world which we know, things are quite different.

Mr. Jenkin

Will the hon. Lady give way?

Ms Church

No, I have already given way to the hon. Gentleman. If he listens to this point, it might help him with the issue that he raised earlier.

The state already has massive responsibilities and obligations in the private sector. For example, if one of the main clearing banks was to suffer a financial catastrophe tomorrow, would the state sit idly by while it went broke? Certainly not. The Government would have to intervene and intervene heavily, unless the Minister is prepared categorically to assert that the Government would do nothing.

What about Government bonds which finance the national debt? They are readily traded on the open market. But whose money is backing those bonds? Who else, but the taxpayer? What about black Wednesday, which all hon. Members well remember, when within hours the Government poured billions of pounds into defending a futile position? What was the ultimate source of that revenue? Once again, it was the taxpayer.

Therefore, in terms of exposing taxpayers to commercial risks, we are already widely exposed and thoroughly intertwined in the workings of the private sector. The argument is spurious. The Government do not seem to realise that, but the public have now seen enough privatisations to recognise that the private and public sectors are properly linked in a sensible way in our economy.

In that context, it is entirely right for the state to take part in profit-making activities if appropriate, as in the case of the Post Office. Given that so many of the Post Office's major competitors are also state owned or have substantial state involvement, what situation could be more appropriate? For instance, the Dutch post office has had a sales division operating in the United Kingdom since 1991. Similarly, the Canadians have allowed their post office to enter the private sector joint venture Global Delivery Express World-wide.

Overall, we have a Government bereft of ideas, trapped in the past and ill equipped to deal with the future. In place of the stagnation and confusion that distinguish the Conservative approach, clarity of vision and a more precise analysis are required. Only new Labour, with its new approach and radical agenda, can deliver that.

Greater commercial freedom would give the Post Office the opportunity that it deserves to evolve into a truly world-class corporation while retaining a clear social dimension in its operation. Under our plans, it would not be just a few fat cat executives who would benefit, but the whole nation, and that is the essential difference between new Labour and old Conservative.

The lottery of privatisations that has been delivered by the Government during their period in office is not a genuine lottery and the British people know it. We know who the winners and the losers will be. If the Government include the privatisation of the Post Office in their manifesto for the next general election, the British people will reject it overwhelmingly. I do not believe that so many turkeys on the Conservative Benches will vote for Christmas.

8.8 pm

Sir Edward Heath (Old Bexley and Sidcup)

I make it clear at the beginning that I am concerned with the Government's policy, and that is what concerns my constituents, my supporters and my former supporters. They are concerned about what the Government are doing about specific problems. I am not concerned about the Opposition, because I do not want them in power. What has reduced the public's esteem of the House is the fact that the two sides spend all their time throwing mud at each other. That is not what the people want. They want a thorough examination of the Government's policy and a thorough explanation from the Government of why they are carrying the policy through and what they think the results will be.

My right hon. Friend the Secretary of State spent the first half of his speech dealing with privatisation, and accused the Opposition of dogma. The real dogma lies in believing that privatisation can be extended to everything. The country realises that that cannot be substantiated. I agree with many of the tributes that he paid to the industries and firms that have been privatised. That is good. But that does not mean that privatisation can be stretched to every activity in the community. There are many activities for which a Government should take responsibility and organise and provide finance. That is the only safeguard for the community if a Government do that.

Now we hear talk about the privatisation of prisons. I am strongly opposed to that. That is a facility in the community for which a Government must take responsibility. We have already seen some of the consequences of that particular action. It is said that the police can be privatised. I think that it is an absolute horror that it should even be mentioned as a possibility.

One must accept that, in a large sphere, privatisation has been successful, but one cannot then go on to deduce that every activity should be privatised. When I say that I am concerned about the future of the Government, it is because the people do not believe that everything can be privatised—the Post Office, for example. I am against what is proposed because my constituents are against it, and I want to be re-elected. I want a Conservative Government again. There is no doubt that my constituents are against it. The Secretary of State admitted that the people are against it. The Government should recognise and respect that. Why are people against it? Because for them the Post Office is something more than just an activity.

I do not represent an agricultural area, so I do not have the acute anxieties that hon. Members who represent agricultural areas must have, but I have a dormitory constituency in which sub-post offices are not just a service that is dished out, as people at the top think, but a way of life. It means much more to people in their activities than just using stamps, drawing pensions and so on. I ask my right hon. Friend to recognise that. The people are against privatisation. Let our Government recognise that and accept that we have to win the next election. I am talking quite brutally about votes. I want votes. What is wrong in saying that? I know when my constituents are against a particular item and when I shall not get their support if my Government insist on going on with such items.

I can support the Government's amendment, because the last phrase is so worded that I can read into it that the Government intend to do nothing. That is satisfactory. If my right hon. Friend feels that he can come along after the next election, if he is re-elected, and say that the Government promise to think the whole thing over, well and good. We could then have another vote and another debate.

Mr. Leigh

My right hon. Friend makes a very moving appeal that we should listen to public opinion. I presume therefore that he agrees that we should listen to public opinion that tells us that 60 per cent. of people are opposed to a single European currency, so we should abide by it.

Sir Edward Heath

My constituents will support a single European currency. [Laughter.] There is no point in my hon. Friend laughing and being so arrogant as to think that he knows what my constituents will do. Of course he does not. What is more, 82 per cent. of British industry wants a single currency, and we shall get a single currency. I apologise to my hon. Friend.

Why are people so opposed to the privatisation of the Post Office, apart from the fact that it is part of their way of life? The Secretary of State said that 49 per cent. of it will not go into private hands. What do my people say about that? They say that with 49 per cent., the Government cannot control anything. Whoever gets it will do whatever they like. We have seen what has happened to 49 per cent. holdings in the past. After a period, they just disappear. Look at what happened to BP, where we always had a 51 per cent. holding, to ensure that BP did what we believed was in the national interest. Then it was reduced to 49 per cent., and then it was wiped out. People know that, and the plain fact is that they do not trust anybody who says, "If it is completely privatised, it will carry on."

Great emphasis has been placed on the 19,000 post offices, but how many will remain? I use a sub-post office, outside Cathedral close in Salisbury. My constituents use them. What undertaking is there that we shall have them? None whatever. That is why people are so strongly opposed to any complete privatisation that goes ahead in the way that has been discussed. I ask my right hon. Friend to recognise that fact. I shall certainly tell my constituents, because I get many letters on the subject, that I am absolutely opposed to privatisation. They know that already, and I shall do my utmost to stop it. We have too many privatisations at the moment, and they are all on the basis of the same dogma. People want to keep the Royal Mail.

Many people think that one can just sell off the royal yacht because it does not matter. They are completely wrong. People say that if we are to have a monarchy, it must be treated appropriately. The royal yacht has stood this country in good stead, with royal visits all over the world. Why throw it away?

Look at Greenwich, which is one of our great glories. The Government say, "Away with it." The Secretary of State for National Heritage sent me an advertisement to take Greenwich, if I wanted to, on a 100-year lease or whatever. The advertisement was of the most vulgar kind, to which the lowest estate agent would not put his name. Why must that happen?

We now read that the royal train will be run by an American company. I am not opposed to American railways, but I believe that our royal train should be run by this country whether it is private or nationalised. People feel that things which are in our own interest and which are of historical importance, such as Greenwich, the royal yacht, the royal train and other items, should not be thrown away in the haphazard way that they currently are.

I hope that my right hon. Friend can influence the Government, so that we British can be proud of the things that are our heritage. That is completely different from spending our time attacking our allies and neighbours for what, allegedly, they are doing, because that is xenophobic, but we can rightly take a pride in the things that are of great historic importance. If we do that, the people will begin to trust us much more and will support us more in the other difficult things that from time to time we have to do.

I shall read the last phrase of the Government's amendment to my own satisfaction—if not that of my right hon. Friend—so that it means that the Government will do nothing beyond what has already been done. My constituents can rest assured that they will have the way of life that they are used to and I shall know that I can continue to use my little place outside Cathedral close. What is more, my constituents may then return their support to us as a party and a Government. I am not ashamed to say that that is what I want and that it is what we have to work for. I wish that the Government would take the same view.

8.18 pm
Mr. Nick Harvey (North Devon)

This is a welcome opportunity to discuss in the House the future of the Post Office, because in his television interview the Prime Minister chose once again to throw into uncertainty the whole issue of the future of the Post Office. There is no doubt that the people of this country feel strongly about it. It is a pleasure to follow the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), because he made two valid points. His account of where public opinion lies on the issue was entirely right. There can be no doubt about that whatever. His second point, that there had been successful privatisations in some industries but that that does not prove that one would enjoy success by privatising every part of public service, is also right.

By suggesting yet again that the Post Office is a suitable candidate for privatisation, the real risk exists of undermining what is undoubtedly a genuine British success story. The Post Office needs to be able to compete in an increasingly competitive market, but it is being hampered from doing that by the uncertainty caused by the Prime Minister's latest outpouring.

The same thing has happened to the railways industry, where the Government took far too long to decide what they wanted to do. As a result of an appalling hiatus that lasted several years, the country's train-building industry has collapsed. If we have a rail renaissance, we shall have to go to France and Sweden to buy our trains. The Government are creating in the Post Office the same degree of uncertainty that affected the railway industry, and they are inflicting the same damage.

When I hear the Secretary of State for Trade and Industry yet again tell the House that it remains the Government's policy and preference to privatise the Post Office, but that they are not doing so because there is inadequate parliamentary support for it, I am forced to conclude that the Government are in office but not in power. If they are unable get such a policy through the House, they should think again and come up with another policy.

Some time ago, in their Green Paper, the Government proposed three alternatives: to privatise, to give commercial freedom within the public sector, or to split the business up. If they are unable to press ahead with privatisation—and I hope that they have rejected the option of splitting up the business—they should try to give some meaning to the commercial freedom option. I thought that some modest progress was being made in that regard. When the former President of the Board of Trade told the Select Committee on Trade and Industry that there would be an attempt to keep the negative external financing limit at about half the projected pre-tax profit, that seemed to give the Post Office at least some basis on which to plan its business. There has, however, been the most appalling reneging on that commitment.

Let us be clear about privatisation's principal problems. The Post Office has already been split into three operating businesses: Post Office Counters, the Royal Mail and Parcelforce. If the Royal Mail, by far the most profitable of those three parts, is to be privatised, there are two obvious consequences. First, the cross-subsidisation option, which is not currently being used, would go indefinitely. I represent a constituency with many small rural sub-post offices. I talk to the people who run them and respect their role in small village communities—a far broader role than simply running a business. Such businesses are a focal point for the community.

I talk to the people who are struggling to run those small businesses. They are inadequately rewarded and remunerated for the service that they provide. The salaries, if one dares to use that word to describe the payments that they receive from the Post Office, are pathetic and insulting. When the Government take away those vast sums of money, which could sensibly have been used to ensure that small rural post offices were more viable, we will think that whole world has gone completely mad.

If the Royal Mail is to be taken out of the equation and its profit may no longer be used for cross-subsidisation, only one sensible conclusion can be drawn: the future of the rural sub-post office network is in doubt and in danger. That is the first principal objection. If the Royal Mail were taken out of the equation, the option of using the considerable revenues that it earns to improve and to build for the future of the rural sub-post office network— and of urban post offices, which also play an important role—would be gone.

Secondly, let us consider what a privatised Royal Mail would be like and what it would choose to do. In representing my constituents, I look to the example of what has happened in the gas, electricity and water industries, to name but three. In all cases, new private operators are, sensibly and properly, beginning to develop cost and charging bases that reflect the true economic cost of doing things. That is a fact. I represent a rural constituency. Providing services in scattered rural areas is much more expensive than providing them in densely populated, urban areas. If the costs of all public services are to start reflecting that, the rural way of life will be undermined.

If the privatised Royal Mail is to continue to be under a Government obligation or regulation saying that it must be willing to deliver a letter from Penzance to the northern reaches of Scotland for the same price as it will deliver a letter from one London street to the next, what on earth is the point of privatising the Royal Mail? What great philosophical leap forward will be achieved if they tell Royal Mail what to charge, to whom to charge it and what the conditions of service will be? If we really cast the Royal Mail free and allow it to do what it pleases, my constituents will suffer. If we do not, but leave it heavily regulated and tell it exactly how to run its business, what to charge and how to do it, what is the point of privatising it?

If we allow the Royal Mail to go its own way and the competitors that we hear about start cherry-picking— to quote an expression that has been used in debates on privatisation—the more profitable business in the towns, then the viability of the business that is left will be reduced as a consequence. Perhaps the Government intend to offer certain routes, accompanied by certain amounts of subsidy. After all, that is the way in which they have chosen to approach rail privatisation. It seems that anything is possible in the ideological quest to privatise.

The Secretary of State properly made the point that Post Office Counters is largely in private hands already. In the past seven years, more than half of directly operated main post offices have been turned into franchises. In addition, about 20,000 sub-post offices are private businesses. As I have described, many of them struggle against considerable odds just to keep going and to provide the useful and broad service that I have spoken about.

The Prime Minister should be aware that his Back Benchers representing rural areas—certainly those representing Devon and Cornwall constituencies—are acutely aware of that as well. That is why some of them have been unwilling to support the ridiculous suggestion that the Royal Mail should be privatised. They understand only too clearly the damage that they will do in their constituencies and, as the right hon. Member for Old Bexley and Sidcup rightly said, to their vote on polling day.

That is not to say that the Post Office should be left exactly as it is. As we have been told, competition at home and abroad is growing. To counteract that, to respond to it effectively and to try and beat the competition, the Post Office needs commercial freedom and access to capital to make decisions and to get on with competing. We want the Post Office to develop into new sectors of business. It would make sense to allow it to join the private sector in joint ventures. That would improve the quality of service that customers receive and ensure that costs are kept low. It could help to turn a national success story into an international success story.

I understand the fact that Conservative Members, in some cases, would prefer, for ideological reasons, to go down the privatisation route. They are entitled to that view, but when they say to Opposition Members that it is impossible to grant commercial freedom in the public sector, they are simply wrong. Examples exist in other industries in this country and abroad of post offices and many other enterprises proceeding on that basis. It may not be Conservative Members' preferred choice. I accept and respect that, but it is wrong and phoney to say that it cannot be done. It is done successfully in other industries and in other countries.

It is imperative that we ease the financial constraints that have been imposed. It is outrageous for the Government to seek to purloin such revenue from the Post Office. It has made great strides forward and achieved great things in terms of its productivity yet, since 1981, it has contributed £1.250 million to Government coffers. Now the Exchequer is looking for the best part of another £1 billion in the next three years.

As has already been said, if we add together the negative financing limit and the corporation tax that will have to be paid, the sums that the Government are looking for are greater than the current profit.

Ms Church


Mr. Harvey

By any reckoning, that is totally ludicrous.

What sort of business anywhere, in any sector, in any country can expect the Government to take away from it at the end of a highly successful trading period a sum greater than the profit that it has made? That is utterly nonsensical, the desperate move of a Chancellor of the Exchequer who is in a tight financial corner and has decided to turn on the Post Office and raid its coffers.

Mr. Jenkin

Of course the money that the Government plan to raise from the Post Office will be incorporated into their financial plan. Can we take it that the Liberal Democrats, who are famous for wanting to increase income tax, will apply that increase not to education, as they promised, but to replacing the revenue lost from the Post Office?

Ms Church

Is that a tax?

Mr. Harvey

The hon. Gentleman should recognise that that is indeed, as the hon. Member for Dagenham (Ms Church) says, a tax. The Government are imposing on the Post Office such huge costs that it will have to levy more costs on the taxpayer, in the form of more expensive postage stamps. The whole gamut of its business will be there, and it will have to charge more. The hon. Gentleman's point—

Mr. Anthony Coombs (Wyre Forest)


Mr. Harvey

I am still replying to the hon. Member for Colchester, North (Mr. Jenkin). If his argument is that we are trying to save the taxpayer from a great burden, he must realise that there are alternative ways in which to do that.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Phillip Oppenheim)

If the money is, as the hon. Gentleman says, a tax, with what would his party replace that funding?

Mr. Harvey

One draws up a budget for the entire year, and the Government have chosen to draw it up on that basis. Most of the money will constitute a tax that falls on business, but the other element, which falls on individuals, could hardly be less progressive. One could hardly turn one's mind to any form of taxation that could be deemed more unfair, or to penalise vulnerable people more. I can think of any number of ways in which a Government might chose to increase revenue, almost any of which would be preferable to the one that the Government have chosen.

On commercial freedom, how can the Government justify—

Mr. Jenkin

Will the hon. Gentleman give way?

Mr. Harvey

I have already given way to the hon. Gentleman.

How can the Government agree to the BBC's participating in just such joint ventures—in the past they have also allowed various parts of the nuclear industry to do so—yet for some reason find it total anathema to consider allowing the Post Office to do the same? Moreover, there is one crucial difference between the BBC and the Post Office—the Post Office is turning in a huge profit, which the Government are raiding for the sake of easing their predicament over the public sector borrowing requirement.

The threat of Post Office privatisation is real. The word "threat" is appropriate because by taking the profitable business away and so preventing cross-subsidy, the Government will put the rural sub-post office network under threat, and by allowing private operators to drive a coach and horses through the principles that have guided our Royal Mail network ever since its inception, they will threaten the universal mail coverage service.

Changes must be made to the way in which the Post Office operates, but the way forward must be through greater commercial freedom within the public sector, not through privatisation. Splitting and privatising the different parts of the network would be unprecedented. Any such move would be to the detriment of customers, and the sooner the Prime Minister abandons that foolish idea, the better for the Post Office and its customers.

8.33 pm
Mr. Edward Leigh (Gainsborough and Horncastle)

May I comment briefly on the speech by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) before he leaves the Chamber? He made a most interesting point, with which I agree—that the public are concerned, and probably oppose Post Office privatisation. There is no doubt about that.

However, the right hon. Gentleman recognises that many of our privatisations have been successful over the years, although the public opposed every one of them beforehand, and while they were going through. The public are naturally concerned about change. However, the fact that the public are concerned does not mean that we should immobilise our policy. We have to consider the economic reality.

This is an example of an issue in which political sentiment flies in the face of commercial reality. The Post Office is a commercial organisation. We simply cannot give it the commercial freedom that it needs if we retain it in the public sector. The right hon. Member for Derby, South (Mrs. Beckett) asked me a fair question—whether I approved of the Government's using the Post Office as a milch cow. I am not a Member of the Government, so I have a certain freedom in what I can say in the Chamber. I do not approve of the Government's doing that, but I do not believe that we could expect better from any other Government. We certainly did not expect better from Labour Governments in the past, nor could we do so in the future.

Ms Church

Will the hon. Gentleman give way?

Mr. Leigh

I shall give way later, but first I want to develop my argument.

One of the most interesting features of the debate was that when I asked the simple question whether the right hon. Lady would limit the external financing limit to halve the profits of the Post Office, she could not answer. Of course she could not. We well know that a Labour Government, like any other Government, will be strapped for cash, and will use the Post Office as a milch cow so long as it remains in the public sector.

I am sorry to say that the speech by the Liberal spokesman, the hon. Member for North Devon (Mr. Harvey), was utterly illogical. Would he really increase income tax to cut the price of a stamp? That seemed to be what he was suggesting.

Mr. Harvey

May I ask the hon. Gentleman exactly the same question? He has told us that he does not approve of the Government's using the Post Office as a milch cow. Can I ask him what the hon. Member for Colchester, North (Mr. Jenkin) asked me? How would he replace the revenue? Is he not arguing against his own case?

Mr. Leigh

I am delighted, because the hon. Gentleman has led with his chin and made precisely the point that I was about to make. I would privatise the Post Office. We should not be running it. That is the simple answer; that is the commercial reality. It is nonsense to suggest that what the hon. Gentleman says can apply to a successful commercial organisation. The Post Office is becoming more and more commercial. Even its brochures say things such as: European postal administrations are now able to operate much more commercially and are making the most of their new status. Success in the future will go to those communications companies who can operate globally". The whole tenor of that is not that the Post Office is a public service, but that it is a highly commercial company operating in the real business world.

The Post Office makes huge profits because it has a monopoly. It delivers the 67 million letters every working day that its propaganda tells us about—and good luck to it.

Ms Church


Mr. Leigh

I shall give way to the hon. Lady in a moment, but I want to answer the question first.

The Post Office is a commercial organisation, and it will make huge profits because it is a monopoly. It can hardly fail to do so. So long as it makes profits the Government, rightly, will view it as an alternative means of taxation. That is the real world in which we live, and there is no point in denying it.

My hon. Friend the Member for Colchester, North made a good point about that. I have received a communication from DHL (UK) International Ltd., a successful private company that deals with parcels. Talking about VAT, the document rightly says: Many of the premium services currently offered by the Post Office are in direct competition with the express distribution industry and yet are still classed as VAT exempt, while DHL has to charge VAT. Consequently, DHL is prejudiced in its ability to compete on price with the Post Office". One could mention 101 other examples, if one wanted to. My hon. Friend and others asked the question strongly: is it fair for a company wholly owned by the public sector and entirely buttressed by it, with a monopoly, to compete unfairly with the private sector because it has full commercial freedom and can do whatever it likes?

Ms Church

Perhaps the hon. Gentleman would like to inform us what proportion of DHL's profits are paid into the public purse, in contrast to the percentage of Post Office profits that are currently bailing out the Treasury from its economic mess.

Mr. Leigh

I am sorry, but that is not the point that I was making. DHL pays corporation tax, like any other business. If we privatised the Post Office it would pay corporation tax. It would be a highly successful company and would yield at least £2 billion or £3 billion on privatisation, which could be used to build hospitals or whatever we liked. It would be able to operate globally in the world marketplace, pay its corporation tax and do all that it could possibly want. But it would not be competing unfairly with the private sector—nor would it be held back.

Those of us who try to run the Post Office in the public sector, as I have done, and as my hon. Friend the Under-Secretary of State for Trade and Industry is now doing, have found that one of the main problems involved is that the postmasters, about whom we have heard so much, keep coming to us and saying, "We can't compete. Give us more power."

The Treasury is right to say to Department of Trade and Industry officials that the Post Office cannot be given more powers because it is in the public sector and unfair competition would result. I understand the Treasury's arguments. We are therefore considering a decline in business. As long as the Post Office is kept in the public sector, regardless of who is in control in this House, the Treasury will prevent sub-post offices and post offices from competing unfairly with the private sector. That is the economic reality that we face.

The only way to solve the problem is to push the Post Office out into the private sector and allow it to deliver the kind of service that it wants. The Royal Mail would be allowed to become a modern communications company, break into the new electronic age and compete on a level playing field with other companies. Post Office Counters would be able to compete, and build itself up by establishing local financial centres in towns and villages where it could deliver the services that it liked. As long as the Post Office is shackled to the public sector it will be used as a milch cow and will not grow.

We face a political problem, as my right hon. Friend the Member for Old Bexley and Sidcup rightly underlined. [Laughter.] There is no point in Opposition Members laughing. There is a political problem; people are worried about change. As we well know, there is no overwhelming public demand for the Post Office to be privatised, any more than there was for any industry to be privatised. The Government must therefore think of ways in which to achieve Post Office privatisation.

One of the ways in which the Post Office could be privatised—I do not know why the Government have not done it during the past couple of years—is to make it a public limited company before the general election, selling, say, 15 per cent. of the shares to the work force, 15 per cent. to the general public, 15 per cent. to city institutions and retaining about 55 per cent. in Government control.

I have no doubt that such a measure could have got through Parliament. Although some Conservative Members are—apparently—opposed to Post Office privatisation, I would have thought that every sensible person would allow it to become a public limited company despite the fact that there is not a majority in the House in favour of it becoming a plc and 51 per cent. of it being owned by the private sector. We could have at least moved down that road. That would have been a sensible halfway step. In our next manifesto we should promise that we will sell 51 per cent. of the shares.

When the right hon. Member for St. Albans (Mr. Lilley) was Secretary of State for Trade and Industry, I tried to persuade him to put the proposal in our previous manifesto, but it was early days and I did not succeed. If there had been a line in our previous manifesto stating that we were to privatise the Post Office, I doubt that it would have lost us a single vote. I do not think that when the public vote—whether they vote Conservative or Labour—they are really concerned about items in a manifesto that state that the Government are or are not planning to privatise the Post Office, as long as the policy is explained. We could have done it, we should have done it and we will have to do it in the end because we certainly cannot leave things as they are for the reasons that I have given.

Whatever the hon. Member for North Devon says, the Post Office is very different from the BBC. There is no point in comparing them and saying that the BBC is owned in the public sector but has full commercial freedom. It is a completely different organisation. The Post Office is a modern, commercial company. There is nothing very romantic about delivering pieces of paper around the country. The overwhelming volume of that paper comprises not letters from old grannies to their nephews, but correspondence from business to business and business to people. It is virtually an entirely straight commercial operation. Apart from political sensitivity, there is absolutely no reason why that business should not be privatised tomorrow.

Plans to privatise the Post Office should be put in our manifesto and carried out. Indeed, I predict that we will put it in our manifesto, that privatisation will be carried out sooner or later, and that it will produce an exciting new future for the company. The Post Office will become one of the great British success stories. It will carve out markets all over the world. I also predict that across the countryside, successful local post offices will deliver financial services and have an assured future. It should happen, and it will.

8.44 pm
Mr. Michael Connarty (Falkirk, East)

I should like to put on record that I am sponsored by the Communication Workers Union. Its money—the amount is in the Register of Members' Interests and has been since the day I was sponsored—goes to run services in my constituency party and does not come to me in any way or form. I make no financial gain from it.

It is interesting that the hon. Member for Colchester, North (Mr. Jenkin) is registered as being a political adviser to an insurance company. There is a slight difference between being a political advisor to an insurance company that is directly commercial and being a Member of Parliament whose constituency party is sponsored by a trade union. Hopefully, Conservative Members will one day realise that and that we are not bought and sold by the money that a trade union gives us. I would say everything that I am about to say regardless of whether I was sponsored by any trade union.

I shall not follow the high level of analysis of my right hon. Friend the Member for Derby, South (Mrs. Beckett) or the high finances adequately covered by my hon. Friend the Member for Dagenham (Ms Church). I was surprised at the approach of the President of the Board of Trade. The Prime Minister put his foot in his mouth during the interview with David Frost and tripped up his hon. Friends by letting slip some little secret idea to win over the right wing of his party and thereby keep himself in office. Perhaps it was a thank you for what happened in the 1922 Committee a week or so ago. I do not think that the idea had been thought through. It was quite clear that the Secretary of State, whom I have known for a long time through his work as Secretary of State for Scotland, was not up to his brief. He made several substantial errors.

The President of the Board of Trade said that Post Office privatisation was being considered, as the Prime Minister had said. That is as far as it goes. The President of the Board of trade revealed in response to an intervention from the hon. Member for Hampshire, North-West (Sir D. Mitchell) that he, personally, was a privatiser. That was interesting: he put himself on the line. Perhaps he, too, is looking for right-wing support. If he is a privatiser, he had better not go looking for the support of people in Galloway, because he will be out on his ear— and any Member representing a Scottish constituency who tries to support Post Office privatisation will join him.

In reply to another intervention, the President of the Board of Trade said that the Post Office was a subsidised industry. My hon. Friend the Member for Dagenham pointed out that for the past 19 years the Post Office has not only been a subsidy-free service to the public—it has been much more. I should like to put a simple lesson in economics on the record so that the right hon. Gentleman can read it later. If a private company borrows money, invests it, makes a profit and pay backs the money that it has borrowed, it is not subsidised. That is called making a profit.

Of course the President of the Board of Trade is not supposed to know about such things because he is not the Chancellor of the Exchequer, who is at last beginning to make salutary comments about his party's policies in the run-up to the 1992 election and how they are costing him a great deal of money and preventing him from balancing his Budget. I believe he said that the blame for £28 billion of public sector borrowing requirement lay clearly at the feet of the Prime Minister.

The previous President of the Board of Trade, the Deputy Prime Minister, is responsible for all the comments that have been quoted. He said in response to the Select Committee report that the Government would try to reduce the Post Office public sector take to 50 per cent, through its external financing limit. Now the Government are talking about reducing the take by £925 million over the next three years, which is almost 66 per cent. of profits. The Post Office has said that that leaves it nothing for investment and for all the initiatives that the Government tell us they will allow it to introduce.

The bottom line, which everybody will realise from what has been said tonight, is that postal charges are going up to pay for the Government's failures. As the President of the Board of Trade said, the Post Office cannot escape the difficulties of public sector finances. The Post Office does not have a problem with public sector finances. It is the Government who have a problem with public sector finances, and their failures will now be paid for by everyone who licks a stamp and sticks it on a letter.

Mr. Jenkin


Mr. Connarty

I give way to the hon. Member for Legal and General.

Mr. Jenkin

The hon. Gentleman should look at the history of privatisation. If he does, he will see that prices have tended to fall after privatisation. The only reason why stamp prices are having to rise is that the Post Office remains in the private-public sector. If we privatised it, it would increase its efficiency, profitability and competitiveness, and there is no doubt that it would cut prices. Indeed, because of its monopoly position, there is no doubt that the Government would want to privatise the Post Office with a K-minus formula to ensure that it did cut prices.

Mr. Connarty

I shall return to the economics of delivering post, which is very important. I hope that Conservative Members will listen because the comments will not be mine, but those of Professor Baumol. He spoke about what he called handicraft industries, or those delivered by a human being at the point of consumption. These include the delivery of letters, and also the health service and education. The quality of the service is important, and not just the speed or cheapness of the service.

I am always amazed to hear Tory Members talk about privatisations as if they were universally successful. They may be successful for the person who gets shares, and particularly successful for those fat cat executives who receive shares at their original price and then take them up later under their share option schemes. We have been disgusted, as I hope the Tories have been—although it may be just jealousy from Tory Members—at the profit rake-offs by the so-called inadequate former executives of public sector industries. Suddenly, these people have become super-whizzkids and are worth a £1 million backhander.

The person who was in charge of the Post Office has run off to the private sector because the executive jets and money that he thought he would get following the privatisation that he was pushing for with the former President of the Board of Trade did not come off. He has had to go and earn his crust somewhere else.

I do not think that all privatisations have been successful. Hon Members should look at the shambles of British Gas. It is all very well for the Tories to talk about prices, but we should look at the structure of the business. A loss of £1.5 billion is pending, and the domestic side of the company has been split off into a company called BG Energy, with £2.6 billion assets. Meanwhile, TransCo and all the profitable overseas sectors have been hived off. The consumer will pay for those losses.

In every case in the water industry, the consumer— because of the monopoly—will end up paying in the long run. Investment has not gone into the water industry, and someone will have to pay for it. That someone will be the consumer. We will have to look at industries in the longer term before we can say that privatisation has been universally successful.

Let us look at the past attempts to privatise. The hon. Member for Gainsborough (Mr. Leigh) talked of a fantasy world where not a single vote would have been lost had the Tories privatised the Post Office before the election. I do not know what world the hon. Gentleman is living in. There were 16,000 submissions received against the proposal, while only 60 were in favour. Lo and behold, the majority of those 60 were speculators, bankers and investment companies who could sniff the profits that they could make from another rip-off of a public sector service. That is the reality.

Mr. Leigh

Did the Conservative party lose the 1983, 1987 and 1992 elections after we had privatised 57 industries?

Mr. Connarty

It is a pity that the hon. Gentleman, who sat so close to the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), did not listen to what the Father of the House said. He said that his constituents did not want the Post Office to be privatised, and that is the reality in most constituencies around the country. The hon. Gentleman shows an absolute contempt—which unfortunately runs through his Back-Bench colleagues— for the people who put him here.

If Conservative Members do not listen, they do not deserve to be here. If the hon. Gentleman thinks that the Government can get away with sticking people's noses in it, he deserves to go, as does every hon. Member who agrees with him. One day, people will not vote on the basis of slavish adherence to their party, and hon. Members will lose their seats on the basis of their contempt for people's wishes. That democratic deficit will be righted at the next general election. That is why 55 Tory Members are running for cover, including Front-Bench Members such as the Minister for Energy who has tried to explain the gas fiasco. They are running away because they know that the people are coming to get rid of them.

Let us look at some of the remarks made in previous debates on the privatisation, one of which was repeated tonight by the President of the Board of Trade. He said that this wonderful Government would not harm the sub-post offices network, which would not be challenged in the private sector. But let us look at the agenda that is beneath that comment, which was raised at the time and continues to be pushed.

The Government want to save money by the use of electronic transfer payments from the social security budget, and the way in which they intend to save money is very simple. One does not receive as much for a transfer payment by electronic means as one does for payments made over the counter, as they are at present. Something like 50 per cent. of the income of most sub-post offices comes from Government transfer payments for social security. Even with that income, there was embarrassment in the Prime Minister's constituency when the local post office had to shut down right in the middle of the last privatisation débâcle because it could not make ends meet. There were not enough people getting transfer payments through that post office.

If the Government increase the use of electronic transfer, they will cut the incomes of sub-post offices to such a level that sub-post offices throughout this country may have to close. These sub-post offices are marginal economic institutions at the moment. Alternatively, the sub-post offices will have to put up the prices of basic food and goods that people in small villages and communities need. Those sub-post offices are not just in villages and communities, however, but in the housing schemes of Paisley, Glasgow and the larger towns of Britain.

Mr. Gordon McMaster (Paisley, South)

My hon. Friend is absolutely correct about the effect of privatisation on sub-post offices and about the role that they play in the community. Does he agree that those sub-post offices are the only contact for many elderly and disabled people with the wider community, and nowhere more so than the constituency of the President of the Board of Trade—Galloway and Upper Nithsdale, which is a collection of small villages?

Mr. Connarty

That point is very well made. The public will certainly be coming for the President of the Board of Trade, not to wish him well in his defence of privatisation, but to wish him out of their lives. They will bring in someone else who represents their views. It is interesting that this is another example of Conservatives saying one thing and doing another. What the previous President of the Board of Trade said about privatisation rings as false as when he used to tell his creditors that the cheque was in the post.

Reference was also made to previous debates about Crown office closures. Crown post offices are very important to people in towns, and it is not just a question of their symbolism as large buildings. For many people, the Crown office is the most convenient place to do their business. There is no doubt that the number of campaigns against the closure of Crown offices up and down the country were not spurred on by counter staff or by the CWU membership. I have been in cities—some of which are represented by Conservative Members—where petitions of 12,000 people were collected to try to stop the closure of a Crown post office because those people saw it as the most convenient place to do their business.

Mr. Thomas McAvoy (Glasgow, Rutherglen)

On the subject of Crown post offices, is my hon. Friend aware of the proposal made by Post Office Counters Ltd. to close Cambuslang Crown post office and make it into an agency post office, despite community protests? That Crown post office operates from premises leased to it by Lanarkshire county council for 999 years as long as it is used for community purposes. Post Office Counters intends to sell that building for £250,000. That is an example of the drive to turn money over to the Government through this semi-privatisation. The money will go straight into the Government's pocket.

Mr. Connarty

The point is well made. That example in Cambuslang is repeated throughout the length of breadth of Britain. It is interesting to consider the numbers. There were 1,500 Crown offices in 1989 and there are now only 700.

It is not just Labour Members who oppose the closure of Crown offices. The right hon. Member for City of London and Westminster, South (Mr. Brooke) and the hon. Member for Basildon (Mr. Amess), no less, oppose the closure of Crown post offices in their constituencies. The hon. Member for Basildon is the original Essex man. One would probably call him the temporary Member for Basildon because, like many others, he is on his way out. The hon. Member for Saffron Walden (Sir A. Haselhurst) also opposes the closure of Crown post offices.

There has been a report about what happens when Crown post offices are lost and replaced with franchise offices. The latest document which has been leaked to Members of Parliament shows that franchise offices make four times as many errors as Crown offices. I have a simple piece of advice for my Front-Bench team. I do not make policy, but I am not afraid to give advice. We should commit ourselves to cease Crown office closures immediately we come to office, before we do anything else, and then conduct a nationwide review of the network of post offices. I believe that we would find serious deficiencies.

Some post offices have gone into the backs of shops. Conservative Members do not seem to be concerned about people who have a marginal income going to collect it by transfer payment at the back of a supermarket, perhaps with a couple of kids, and then coming out and buying things that they did not intend to buy, are not in the family budget and they do not and cannot normally afford. That is the pattern that is beginning to emerge. People are not spending in a planned way because many other things are demanded of them. Conservative Members should take heed of that.

We are not talking just about whether something makes sense commercially and whether people make a profit. We are talking about whether it makes sense socially. Does it make sense for the type of fabric of society, not just the type of commercial enterprise that we want to see? That is the difference between Conservative Members and Labour Members. We believe that we should be concerned about the social results of the things that we do, not just the results in terms of profit and share price. We care for the many. They care for the few, and everyone knows it. [Interruption.] Does the hon. Member for Wyre Forest (Mr. Coombs) wish to intervene?

Mr. Anthony Coombs

I will allow the hon. Gentleman to finish.

Mr. Connarty

I can assure the hon. Gentleman that I will be on my feet for a few minutes yet.

Stamp charges are likely to rise. The increase in postage will damage some of the commercial interests that Conservative Members wish to see developed for post offices. We are told that the post offices are successful and have operated for 19 years without subsidy. We have been told about all their achievements.

The Mail Order Traders Association, the Direct Marketing Association, the Mail Users Association and the Periodical Publishers Association have taken out an advert in The House Magazine. I hope that Conservative Members will take the trouble to read it. In case they do not, I will read some of it into Hansard for their benefit. It says: Direct mail alone generates £13 billion worth of business: Substantial economic decline"— if postal stamp charges rise. It says that Over 50,000 jobs depend on the Mailing Industry: 15 per cent. to 20 per cent. of jobs could go"— if postal stamp charges rise. It says that Most advertisers plan to increase print budgets: Substantial switch to electronic media"— to save on stamp charges, if they rise. It says that there has been a 60 per cent. growth in Direct Mail over 5 years: Lost opportunity for an expanding industry"— if postal stamp charges rise. It refers to Financial Mail, the largest single sector: Severely damaged"— if postal stamp charges rise—and a 30 per cent. growth in magazine subscriptions over 5 years". The President of the Board of Trade tells us that, despite the increase in charges, everything has grown, but the associations say that they are likely to become unprofitable if they have to pay the extra stamp charges on mail. The advert says simply, "Say no to postage price increases." That advert was paid for by the mail users associations.

Let Conservative Members listen to someone if they will not listen to us.

Another thing that is happening in Royal Mail is that delivery time agreements are being eroded. The Department of Trade and Industry has been behind encouraging that, just as it was behind setting targets for the closure of Crown post offices—as was revealed by a leaked memo during the last campaign.

The standard is supposed to be that all first-class mail is delivered by 9.30 am. The pressure is on to earn the money that will be taken away in the external financing limit by pushing postmen out with more and more mail in their sack. That will mean that people will sometimes not receive their first delivery of mail until 11 am, with a peripheral delivery of the last bits of mail after that time.

In London, there is an agreement that 60 per cent. of the mail goes out in the first delivery and 40 per cent. goes out in the second. In Scotland recently there was an industrial dispute caused by the actions of the management in trying to impose new rotas, under which 90 or 80 per cent. of the mail went out in the first delivery. We find people making deliveries at 11 o'clock. When we ask whether it is their first or second delivery, they say that it is their first delivery. It is the first delivery. The Government have a responsibility, before they talk about privatisation, to make sure that consumers get the standard of service that they thought that the Government were guaranteeing them through regulation.

Finally, I come to Professor Baumol's analysis of handicraft industries. I was an economics student when he was considered to be extremely right wing in the economic world. He recently gave a lecture on the health service but referred to other industries that come into the same category—industries delivered by the hand of a human being at the point of consumption. He named mail delivery as one of those and said that, as with health, we cannot get productivity by cutting the number of bodies doing the job. That leads to a loss of quality, not better productivity. There is a difference. The Government's pressure will bring about a loss of quality. It has already been said by the new chief executive of the Post Office that the stupid remark of the Prime Minister—I do not think that the Prime Minister had thought about it before opening his mouth, and forgot to put his brain in gear— has caused a great deal of concern in the industry and problems for its investment in the future.

I do not disparage the image suggested by the Prime Minister of a Britain with warm beer and cricket on the lawn. I prefer a good, cold pint of lager and a game of rugby, as do most Scots—especially when we play England, as we will in a few weeks' time. I predict that another victory is on the way.

The Government and Conservative Members should not diminish what is left of their reputation. They should back off and not put this in their manifesto. I say that for their sake and for the sake of the people, who want a public sector Post Office with commercial freedom, not a privatised Post Office fighting in the market and sacrificing its customers for the sake of its boardroom.

9.6 pm

Mr. Douglas French (Gloucester)

The motion invites the House to accept that privatisation would threaten the continued success of the Post Office and place individual post offices in jeopardy. It is not a very full-hearted endorsement of the Opposition's argument for commercial freedom that they make no mention of it in their motion.

To be fair to the right hon. Member for Derby, South (Mrs. Beckett) and the hon. Member for Dagenham (Ms Church), they did argue in favour of some measure of commercial freedom and were joined by the hon. Member for North Devon (Mr. Harvey). One assumes, from what he said among the political invective, that the hon. Member for Falkirk, East (Mr. Connarty) also believes in a measure of commercial freedom. None of those hon. Members gave a coherent presentation of how we could achieve commercial freedom in the public sector, which, after all, is at the heart of this debate.

The problem is that the Labour party is ideologically opposed to any proposals that are labelled as privatisation. The hon. Member for Dagenham accused us of it, but it is her party that is being ideologically dogmatic by not recognising that the Post Office needs commercial freedom and that the only way to deliver it is privatisation.

It is interesting to note that senior management of the Post Office have consistently argued for privatisation. Bill Cockburn was an articulate proponent of it. It is much to the loss of the Post Office that he tired of waiting for something to happen. He wanted privatisation, but, sadly, he has gone to W. H. Smith—to its gain and to the loss of the Post Office. Michael Heron continues to argue in favour of privatisation.

Sadly, the Labour party takes the view that what senior management want cannot also be in the best interests of the Post Office's work force. That was clear from the sneering comments of the right hon. Member for Derby, South and the way in which she referred to City institutions and from the reference of the hon. Member for Falkirk, East to fat cats. Those are typical left-wing arguments—what is good for management will automatically be bad for those who work for the business. Rather, it could more appropriately be argued that management is best placed to know what is likely to benefit the business.

The first thing that the management of the Post Office has always recognised is that Royal Mail is at the heart of the business and that success must be achieved in that sector. In relative terms, it is more important than any other part of the business. If the fortunes of Royal Mail go down, so, too, will those of Post Office Counters.

Royal Mail has been, historically, a labour-intensive organisation, but is becoming less so because of technology, especially automatic sorting equipment, which becomes more advanced almost every day. It represents a huge investment by the Post Office to keep up to date with technological advances.

Technology means that a given volume of mail can be handled by a smaller work force. We have heard from two hon. Members who are sponsored by unions with an interest in the Post Office, and I appreciate that the unions are concerned that the use of new technology could result in lost jobs. That is the gut reaction when one tries to gauge what might happen. My local sorting office on Eastern avenue, Gloucester provides several hundred jobs, and I must consider what is in the best interests of safeguarding them. To ignore the arguments about the advantages of privatisation is the very way to place those jobs in jeopardy.

That privatisation would ultimately mean job losses is the thrust of the message from the Labour party to the unions or, given the wording in the Opposition motion, perhaps it is the thrust of the message from the unions to the Labour party. The reverse is almost certainly closer to the truth. It is not possible now to stop new technology, and no one would want to stop new investment in plant. It is possible, however, to take steps to ensure that the volume of mail handled by the Post Office and the profit that it generates increases rather than decreases. That can best be achieved, as every hon. Member who has spoken has accepted, by facing up to the fierce and growing competition to which the Post Office is subject.

It is easy to talk about competition without appreciating the impact that it has on the business of the Post Office. As my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) has already said, one of the most profitable sectors of Post Office business is the delivery of bulk business-to-business commercial circulars. The Dutch post office, PTT, to which reference has already been made, has become extremely skilful at bidding for bulk United Kingdom direct mail business. That mail goes from the United Kingdom to destinations outside our country. PTT has been most successful at creaming off business that would otherwise have gone to Royal Mail.

The Dutch post office has now gone further, however, because it has succeeded in bidding for bulk mail destined for United Kingdom addresses. According to the accounting conventions operated by the Universal Postal Union, four fifths of the revenue raised through the postage rate goes to the country collecting the post and just one fifth goes to the country making that delivery. Where bulk mail business bound for destinations within the United Kingdom is taken on by an outside Post Office, Royal Mail bears the bulk of the costs and gains the minimum of the revenue. It is necessary to address that problem.

Why can the Dutch post office organise itself to win such business? The first reason is that it can make proper commercial quotations and charge proper commercial tariffs. In the statement made by my right hon. Friend the Member for Henley (Mr. Heseltine) in May 1995, some reference was made to Royal Mail being allowed to be more commercial in the deals that it makes. It must, however, still make deals according to fixed formulae. The Dutch post office does not have that constraint, so it can bid for a line of business at a price that it knows will secure it. Special tariffs for special customers is a commercial feature available to the Dutch post office but not available to Royal Mail.

Secondly, the Dutch post office can offer a combination of services, such as the fulfilment of a total postal requirement that covers designing and printing an item, enclosing it in an envelope, generating the address to which it can go and providing transport to take it there. Royal Mail is currently constrained from offering that combination, which customers want.

Thirdly, the Dutch post office is able to enter into realistic alliances and joint ventures. It does not have to ask the Dutch Government whether it is all right to make an alliance or a joint venture with a company; it can get on and do so. That is real commercial freedom.

It was encouraging, in one way, to note from the statement in May 1995 that we are starting to move in that direction, but we have not gone anywhere near far enough. Some Opposition Members have argued that it does not matter because foreign post offices do not have the right to deliver to United Kingdom addresses; the bulk of the business is a Royal Mail monopoly and therefore Royal Mail is protected. That is a misconceived point of view because it is based on the assumption that the post is an irreplaceable service. That is not so.

As a communication medium, writing on a piece of paper and sending it around the world carried by hand is a very outmoded concept, and will quickly be overtaken by all types of communication methods such as the Internet, e-mail, fax and all the others that were mentioned earlier. Royal Mail's problem is that its business is rooted in a function that is going out of date, and if there ever was an argument why it needs to be able to expand its repertoire, that must be it.

The strategy for the British Post Office should allow it to compete vigorously and effectively in its share of the postal market, whatever size that market may be, and to have the freedom to stake its claim to what will be the alternatives to carrying a piece of paper around the globe.

In my opinion, commercial freedom is vital, and commercial freedom in the public sector is a contradiction in terms. If commercial freedom means anything, it means the opportunity to take a risk—an argument that was well made by my hon. Friend the Member for Colchester, North (Mr. Jenkin). If the Post Office is in the public sector and it is allowed to take a proper risk, that risk is underwritten by the taxpayer. That is the central message that the Opposition parties need to be able to understand and digest because, until they do, they will never adopt a policy on the Post Office that would give it a satisfactory future.

It is wrong that an organisation such as the Post Office has to seek the Government's approval whenever it wants to make a significant investment decision and that an obligation is placed on the Department of Trade and Industry to involve itself in such decisions, not only because it has a right to do so but because, as guardian of the taxpayer's money, it has a duty to do so. The Post Office must be allowed to set its own financial targets, to make its own investment decisions and to raise capital when it needs to do so.

Opposition Members have complained about the level of the external financing limit. I entirely accept the basis of their complaint—that the EFL is far too high and that it inhibits the Post Office—but the answer is to replace the EFL with the corporation tax that the Post Office, as a public company, would pay like any other public company.

As things stand, Royal Mail is undoubtedly destined to lose business on a global scale unless steps are taken. Other post offices, such as the Swedish post office, the Dutch post office and PostDienst in Germany, have recognised that fact. Theo Jongsma, the managing director of PTT, when visiting London in 1994, said: I support the privatisation of postal companies worldwide". That view is shared by chief executives of other leading European post offices. We must have a strong, profitable Post Office if we are to preserve the uniform price and universal delivery to which the Government are committed and which my hon. Friend the Member for North-West Hampshire (Sir D. Mitchell) stressed. Profits are the best way of ensuring that those undertakings are met.

Finally, I join my hon. Friend the Member for Gainsborough and Horncastle in predicting that Post Office privatisation will occur in the not too distant future. I further predict that, when it occurs, the unions that are linked to so many Labour Members who currently oppose privatisation will be the first to invest in it.

9.20 pm
Mr. Roger Stott (Wigan)

Like my colleagues, I am a sponsored member of the Communication Workers Union and I freely declare that interest. My hon. Friend the Member for Falkirk, East (Mr. Connarty) explained to the House precisely what that means: none of us receives any financial payment for the honour of being sponsored by the union.

I am sorry that the hon. Member for Gainsborough and Horncastle (Mr. Leigh) has left the Chamber. Last year he and I participated in a debate at Durham university, where he was a former student. That evening he had the unenviable task of defending the following motion: "That the House has no confidence in Her Majesty's Government". I won the debate and the hon. Gentleman, who was then a member of Her Majesty's Government, was subsequently sacked from it.

I am sorry that the hon. Gentleman is not present to hear my remarks tonight, as I am always interested to hear what he has to say about these matters. He is a Thatcherite, and such people are now restricted to the political Jurassic Park. The hon. Gentleman wanders around in a field. He is let out occasionally to graze; he is then returned to the field and the gate is closed.

The hon. Member for Gainsborough and Horncastle suffers from the political equivalent of mad cow disease: he believes that we should adopt the principles of privatisation and the free market. [Interruption.] If the parliamentary private secretary, the hon. Member for Worcester (Mr. Luff), will be quiet for a moment, I shall deliver my speech in my own way.

The hon. Member for Gainsborough and Horncastle derided the concept of public service in his speech. Many years ago when I worked for the Post Office—admittedly, I was a telephone engineer and not a postman—I was proud of the public service that I performed. I know that the members of my union—including the postmen and women—are very proud of the public service that they provide. They do not simply deliver letters, issue stamps at a Crown post office, or pay social security benefits at a sub-post office: they are imbued with a sense of public service.

If the milk bottles are on the doorstep of an old-aged pensioner's house three days after they should have been removed, it is the postman or woman who reports it to the police or the local social services. They are much more than deliverers of letters: they are an essential part of the community. They take burgeoning pride in the fact that they are public servants—just as I did when I was a public servant working for the Post Office.

I remember connecting electricity late one winter's night for a farmer whose sheep were lambing. I did not do that because I was being paid overtime; I did it because it was my job. Postmen and women do the same thing. What is wrong with the principle espoused by Rowland Hill, the founder of the modern British Post Office— no matter where a person lives, be it in Land's End or the Shetland Isles, when he buys a second-class or first-class stamp he pays the same price as everyone else. It is not the private market but public service dedication that guarantees that his letter will be delivered—even if the postman has to put a sack on his back and walk 15 miles over the hills. For the price of a 19p second-class stamp, the letter will be delivered.

I do not want to hear any more from Conservative Members about deriding the concept of public service because—as the Father of the House said—their constituents value the public service ethic imbued in the members of today's Post Office.

Much has been said about the milch cow effect that the Government have on the Post Office. I am a simple soul— a telephone engineer who became a politician. I never understand the problem with allowing the Post Office to have a different EFL formula. Why must we constrain what is undoubtedly a very profitable business with Treasury mumbo-jumbo? The hon. Member for Gloucester (Mr. French) said that the taxpayer guarantees the Post Office while it remains in the public sector. Is he saying that the Post Office will go bust if the public sector borrowing rules are relaxed? Of course it will not. A little more imagination is required—and that seems lacking on the Conservative Benches—with anything to do with the public sector. As my right hon. Friend the Member for Derby, South (Mrs. Beckett) said, we should examine the potential for developing the Post Office in the public sector as a profitable business and releasing the shackles of Treasury constraint and phoney EFL rules.

For all the theorising of the Jurassic Park hon. Member for Gainsborough and Horncastle, the constituents of Conservative Members will not allow them to privatise the Post Office. If Conservative Members want to be turkeys voting for an early Christmas, they should support privatisation. They will not win the next general election if that measure is in the Conservative manifesto.

9.27 pm
Mr. Anthony Coombs (Wyre Forest)

After that somewhat intemperate and antediluvian contribution from the hon. Member for Wigan (Mr. Stott), I shall refer to the comments of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), who spoke about a pragmatic approach to privatisation. Ever since I first became interested in privatisation in 1978, I have taken the entirely pragmatic view that it should be agreed only if it gives significant consumer benefits in terms of price, quality and service.

It is arrogant of the Opposition to table a motion that opposes even the stated intention of reopening the question of privatising the Royal Mail and Parcelforce. The Opposition do not even want to examine the arguments; they proceed from the ideological basis that the arguments should not be put to the British people.

Even more arrogant was the hon. Member for Falkirk, East (Mr. Connarty). When he was confronted with the facts by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh)—who pointed out that the Conservative party, having privatised no fewer than 57 companies and public sector institutions, won the 1983, 1987 and 1992 general elections—the hon. Gentleman said that that was not the result of any decision by the electorate but the consequence of slavish adherence to their party. The fact that the Conservatives got 19 million votes— a record—at the last election shows that that is patent nonsense.

Ms Church


Mr. Coombs

I do not have time to give way if I am to leave enough time for the winding-up speeches.

I come from the constituency where Roland Hill was born. We celebrated the 200th anniversary of his birth a few weeks ago. I support a universal letter service and a nationwide system of post offices, at a uniform price. I also recognise that, under a Conservative Government, the Post Office has taken significant steps forward, many of which have already been mentioned. The volume of mail has risen by 50 per cent. in the past 10 years.

Through its customer first culture—a 1993 survey confirms this—the Post Office has become more generally appreciated by the public. Postal charges have not risen since 1993 and are lower than they were in 1979, and last year the Post Office made a profit of £472 million. All this is evidence of an efficient organisation, but one operating as a monopoly. That enables it to produce results that might not be possible in a competitive market.

Although the organisation is commercial, it is operating in a significantly changing environment, which was described by my hon. Friend the Member for Gloucester (Mr. French). The changes usually involve technology: e-mail, telexes, faxes, interactive television and cable. All will begin to eat into the traditional market held by the Post Office. The United States experience shows that only 15 per cent. of international express mail is now dealt with by public post offices. My hon. Friend the Member for Gloucester talked about the Dutch privatisation and the inroads that have been made into the British bulk mail market. The Swedish Government have ended the monopoly of their service; the same goes for Canada and New Zealand. The German Government have just privatised their telecommunications business, so they will be looking for additional international outlets.

This, therefore, is an increasingly competitive international business. Two years ago, The Economist wrote: Those post offices that find new markets and cut costs—meaning those that are privatised—will be the ones that thrive. That means not just nationally but internationally. Cross-border business mail is growing fast. And successful private mail operators, like other privatised utilities, could one day invest direct in foreign businesses, galvanising sleepy local competition. For those that are held back by their political masters, the future would then be a bleak one, as shrunken suppliers of traditional domestic physical mail. That is why I believe that, while Post Office Counters can be kept in the public sector and arrangements can be made to keep our network of already generally private post offices, and although the business of post offices is set to increase—insurance, bulk cash handling, banking, sales of tickets, pensions and driving licences—the organisation must go forward to the privatisation of Royal Mail and Parcelforce, and it should happen not on a 51 per cent. basis but on a 100 per cent. basis.

Competition must result from the privatisation. Ninety per cent. of the population, following the privatisation of BT, now have access to alternative services such as Mercury. Similarly, we must introduce a duopoly, or even greater competition, to the postal services market. That would lead to the sort of expansion that everyone in the House wants, and it would allow the Post Office to compete as it wants to. It would be quite consistent with the privatisation policy of this Government which has been such a success.

The Economist had this to say: One of the Conservatives' clearest triumphs over the past 15 years has been the privatisation of state-owned companies. Fat nationalised industries have been transformed into fit and profitable enterprises. Huge subsidies have been eliminated. The prices of phone calls, electricity and gas have dropped in real terms. Services have improved strikingly. Eager to learn from this success, scores of governments have studied the British example". That is precisely what has happened in the case of British Telecom, British Gas, the water companies, British Aerospace, British Airways, Rolls-Royce and the rest of the 57 companies that the Government have privatised. The lesson has been learnt: privatisation means increased competition, more commitment, lower prices, more investment and better quality for the consumer.

What I find so nauseating is the fact that, although the Labour party pretends to be market-friendly and to approach subjects such as this in a way that is likely to assist the consumer, we find at every turn that it is the friend of the producer and the trade unions. It is no coincidence that all the Labour Members who have spoken in the debate have been sponsored by trade unions in the industry.

Labour Members says that they are objective. Why, then, did they oppose every privatisation proposed by the Government? They say that they want to examine the issues objectively and sensibly. Why, then, do they not even want to engage in a study of the potential of telecommunications privatisation? They pretend to be the consumer's friend; yet they insist on interference and bureaucracy that would damage the consumer's interests. Most hypocritical of all, they say that they favour a stakeholder society—yet they would deny us privatisation, under which the number of private shareholders has risen from 3 million when the Conservatives were first elected to more than 11 million now. If that is not a stakeholding in British industry, I do not know what is.

Like Labour's policies, the motion is redolent of the party's hypocrisy in regard to industrial and economic matters. I urge the House to reject it.

9.36 pm
Dr. Kim Howells (Pontypridd)

Madam Deputy Speaker—[Interruption.] I am sorry, Mr. Deputy Speaker. I was so intrigued by the speech of the hon. Member for Wyre Valley—[HON. MEMBERS: "Wyre Forest."] I mean the hon. Member for Wyre Forest (Mr. Coombs). Obviously I have valleys on the brain. Anyway, I was so intrigued by his speech that I failed to observe your arrival in the Chair, Mr. Deputy Speaker.

The comments of the hon. Member for Wyre Forest were not appropriate. We chose this topic for debate because we are interested not only in the issue of Post Office privatisation, but in what happens to the Post Office in general. The motion refers to the future of the Post Office. I am sure that, like me, my hon. Friends are genuinely interested in debating the subject: that is why we are here tonight.

I valued not just the wisdom of those of my hon. Friends who have spoken this evening—some spoke from experience—but the contribution of the Father of the House, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and, for different reasons, that of the hon. Member for Gainsborough and Horncastle (Mr. Leigh). Both showed up the sham of the amendment. The Father of the House pointed out that the commitment to privatisation was conspicuous by its absence; indeed, he said that he would vote with the Government precisely because the amendment was vague, and pointed out that the Government were not going to privatise the Post Office. Nothing could be more damning than that. I look forward to hearing what the Minister has to say about whoever drafted the amendment: I cannot believe that he drafted it himself.

The speech of the hon. Member for Gainsborough and Horncastle was interesting. It was, at least, an honest, forthright and at times courageous statement that the Government should privatise the Post Office. The Government, however, are afraid to say whether they will do so.

Hon. Members' speeches have reflected in the House the public reactions of hon. Members to the Prime Minister's Frost interview in January. It is worth recalling the words of the hon. Member for Harrow, East (Mr. Dykes) who said: I think it would be both astonishing and unwise to revive this matter again. The post office runs perfectly well as a successful and profitable public corporation, unlike other industries which have been privatised in the past. I do not believe its privatisation would command any strong public support in the next election. The hon. Member for Broxtowe (Sir J. Lester) said: It is still an efficient post office … I am lukewarm, to say the least, about the case for putting anything in the manifesto. Such reactions are by no means limited to hon. Members. The passions aroused by the issue of Post Office privatisation are shared widely throughout the United Kingdom. The Prime Minister recognised that when, in the same Frost interview, he said: We are democrats and if we can't get something through Parliament then we can't do it. That quotation has the hallmarks of the Prime Minister's peculiar syntax, but I use it anyway.

Why on earth has the Prime Minister announced that he wants to have another shot at the privatisation of the Post Office? Is it because the Government have yet to find an ideological successor to the privatisation programme of his predecessor in the 1980s?

Mr. Stephen Day (Cheadle)

Will the hon. Gentleman give way?

Dr. Howells

No, I am sorry but I do not have time.

Are we to view that announcement as part of the legislative programme outlined in last year's Queen's Speech which Conservative central office described as pushing forward radical policies for the millennium"? I am glad that the Government Whip, the hon. Member for Plymouth, Sutton (Mr. Streeter), agrees with that. To privatise or not to privatise is the totality of the Tory vision for Britain.

The hon. Member for Harrow, East said that the Post Office runs perfectly well as a successful and profitable public corporation, and we must all agree. The evidence is irrefutable. Last year, it made £472 million profit. The Government certainly agree with him. That is why the Chancellor announced last November that the Government were requiring the Post Office to provide an additional £400 million for the Treasury coffers during the next three years. They will milk the Post Office, not for £532 million as the previous President of the Board of Trade, now the Deputy Prime Minister, said last May, but for £925 million.

If it works, why fix it? That was a question that the consultancy, London Economics, examined in its critique of the Government's Green Paper on the future of the postal service. It concluded: Privatisation itself is not a fundamental driver of efficiency improvement. Competition, effective regulation and a determination to restructure the business when necessary matter more. Why do not the Government understand that? The British people do. That is why they trust the Post Office. Polling evidence, which has been quoted by hon. Members on both sides of the House, tells us that they believe it to be efficient, safe, competitively priced, community based and accountable and, through its Crown post offices and sub-post offices, it constitutes a functioning social centre in most communities. As my hon. Friend the Member for Wigan (Mr. Stott) reminded us so forcibly, the British people perceive it as being staffed by individuals who know and care about the communities that they serve.

The Post Office is one of the great popular institutions, binding together all parts of the United Kingdom. The Government must know that countries such as ours do not hang together without some form of social and cultural cement, be it a common history of opposition to tyranny or an affection for institutions as diverse as the Queen's Christmas message or the theme tune from "EastEnders". We hear endless homilies from the Government about how important it is for the British people to recognise the strength that we have in unity. It is curious that they seem unprepared to consider the possibility of strengthening this great national institution.

People trust the Post Office. They trust postal staff and, in particular, they trust postmen and postwomen. If anybody wants proof of how far the public trust them, I challenge the Government to try to make a lovable children's cartoon hero out of Private Pension Adviser Albert and see how he gets on in the television ratings against Postman Pat.

The Post Office brand name is invaluable to it. Its red vans and office signs are among the best known of all liveries in the world. It guarantees good and reliable service, uniform prices and universal delivery. No matter what the Government might promise to convince us that they are interested in protecting those guarantees, the public do not believe it, and with good reason.

By international standards, the Post Office is very efficient and its services are competitively priced. If it is given sufficient powers by the Government, it will be capable of meeting all its commercial challenges from home and abroad. Will the Government give it those powers? On the contrary. When the Chancellor announced his intention to levy the extra £400 million on Post Office profits, he was levying a new tax on the public through the inevitable increase in stamp charges. Why did he decide to do that? Because the new levy makes sense only if it is interpreted as an attempt to sabotage the image of the Post Office as a profitable concern—in other words, to blacken its name in the eyes of the public. It is the softening-up process for privatisation.

From the same briefing document to which the hon. Member for Gainsborough and Horncastle referred, the Association of International Courier Express Services and DHL made no secret of the fact that they are, as they put it, extremely conscious of the value of the universal service provided by the Royal Mail and none of the Government's proposals for extending competition in the postal services seeks to undermine that service. Why should they? Those organisations, which represent 95 per cent. of the United Kingdom's express distribution industry, also represent the commercial interests of some 60,000 employees. That is 60,000 households that know the value of the service that the Post Office provides. Those organisations demand not that the Government should start to dismember the Post Office or bleed it to death but that they should get their act together on examining and strengthening the rules of competition so that the express distribution companies have an equal opportunity to compete.

Their aspirations are not a world apart from those expressed by the Post Office chief executive, Mr. John Roberts, and his managers in the aftermath of the Chancellor's November announcement. They are as acutely aware as the private operators of the challenges posed by the European Commission's draft directive and, more worrying, the draft notice on the implementation of proposals and timetables for the liberalisation of postal services in the European Union. Through the media grapevine, they have made it abundantly clear that the Chancellor's increases in the negative external financing limit are likely to mean that they will be damaged in their attempt to meet those challenges.

If the indirect extraction of capital is too great, it will leave little funding for the Post Office's investment programme and the competitiveness of the Post Office will be affected. That in turn could have an adverse effect on the quality of service and give the Government the perfect excuse for arguing that the only way for the Post Office to compete successfully is through privatisation. That is happening at a critical time for Post Office Counters. A huge modernisation programme is about to be implemented there under the private finance initiative. If any project demands a secure and consistent business climate, it is that one, but it is not likely to enjoy such a climate because the Prime Minister's statement has nothing to do with improving the performance of postal services.

The Government have decided to privatise the Post Office through a secret agenda and not openly. I have no doubt whatever about that. That is why the Government's amendment is so weak and inconclusive. The Prime Minister is considering, once again, the privatisation of the industry for one reason only: he needs to throw his own right wing—many of whom have been represented here tonight—some red meat occasionally, and the latest lump of red meat is this reheated bit tonight. He will not be able to look to the Post Office for support, as I do not think that Mr. John Roberts will take the same line as his predecessor. He has made it clear that he wants to get on with the job that he is paid for: making this a successful, efficient and profitable business. Judging by the Post Office's financial results, it seems that it has been doing that job well.

This is a case of the worst sort of political interference in the affairs of a healthy and forward-looking company. The Post Office is asking questions that are generated by the commercial realities of national and international competition, but it is receiving nothing more by way of a reply from the Prime Minister than the whine of internal party conflicts on the Conservative Benches.

Why do the Government bother when the best that the Prime Minister could come out with on Post Office privatisation in his fateful interview with Sir David Frost was: I would like to have seen it but there was no parliamentary majority for it … We will look again and see if it is a subject for the next Parliament when we come to look at the manifesto. Talk about hedging his bets. That statement is the worst sort of mischief-making. There is no courage in it, no determination. It is a tease. Will he or won't he? What he will do is remind everyone that this clapped-out Government have only one agenda: to cling to power by persuading their rebellious right-wing to troop through the Division Lobby. If that means sacrificing a first-class postal service, so be it, says the Prime Minister. That is why I commend the motion to the House.

9.50 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Phillip Oppenheim)

I am grateful for this chance to reply to the debate. I have listened carefully to all the speeches and I especially enjoyed the speech of my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), who has much experience in this sector, and of my hon. Friends the Members for Gloucester (Mr. French) and for Wyre Forest (Mr. Coombs), with which I agreed.

I was interested also in what Opposition Members said about possible Post Office privatisation. I remind those who bothered to turn up to what, after all, is a debate on an Opposition motion—at one point, only seven Opposition Members were here, most of whom seem to be sponsored by the Post Office union—of the comments that some of their predecessors have made about earlier privatisations. When we privatised British Airways, the Labour spokesman said that it would become the pantomime horse of capitalism".—[Official Report, 19 November 1979; Vol. 974, c. 125.] The person who said that was the hon. Member for Glasgow, Garscadden (Mr. Dewar), who now sits on the Opposition Front Bench and is the Labour Chief Whip. What happened is that British Airways has been transformed from the airline that was rated below Aeroflot by its passengers, to the world's favourite airline, carrying more international passengers than any other in the world. It is the most profitable and the largest airline in Europe. French, Italian and Spanish taxpayers are still contributing hundreds of millions of pounds keeping their sad, state-owned flag carriers in the air, but British Airways is contributing money to hospitals and schools—not bad for a pantomime horse.

Mr. Connarty

On a point of order, Mr. Deputy Speaker. We have limited time. Could you persuade the Minister to return to the subject of the debate?

Mr. Deputy Speaker (Mr. Michael Morris)

I was not aware that the Minister had left it.

Mr. Oppenheim

As the hon. Gentleman spoke for 22 minutes and then left the Chamber—no doubt to collect his cheque from his union sponsors—

Mr. Connarty

On a point of order, Mr. Deputy Speaker.

Mrs. Beckett

Will the Minister give way?

Mr. Oppenheim

I am not giving way.

Mr. Deputy Speaker

Order. Is the right hon. Lady raising a point of order?

Mrs. Beckett

I do not think that the Minister has given way. I ask him again to do so.

Mr. Oppenheim

I have only a short time left. Opposition Members spoke for too long.

Mrs. Beckett


Mr. Deputy Speaker

Order. We cannot possibly have two hon. Members shouting across the Dispatch Box. The right hon. Lady has the Dispatch Box.

Mrs. Beckett

I was saying that the Minister has made a disgracefully worded allegation against my hon. Friend the Member for Falkirk, East (Mr. Connarty). He should withdraw it, according, I think, to the rules of the House.

Mr. Oppenheim

Had the right hon. Lady been in the Chamber for her hon. Friend's 22-minute speech, she would know that he admitted to being sponsored by the union.

On Second Reading—

Mr. Connarty

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

I hope that this is a genuine point of order.

Mr. Connarty

It is, Mr. Deputy Speaker. The Minister said that I left the Chamber to receive a cheque from another organisation. That was an accusation that I took money in my hand, when I had explained that I received no money from anyone. I believe that that was a severe abuse of the Minister's position, and I ask him to withdraw it. I ask you to instruct him to withdraw it, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. If the Minister said that the hon. Gentleman received a cheque for his speech— [Interruption.] Order. If that is what the Minister said, that was not an appropriate charge, and I should be grateful if he would withdraw it.

Mr. Oppenheim

As the hon. Gentleman is so sensitive about his union sponsorship, of course I withdraw.

On Second Reading of the Telecommunications Bill— the Act that privatised BT—the Labour spokesman, the right hon. Member for Salford, East (Mr. Orme), said: The public telephone box could be threatened with extinction."—[Official Report, 18 July 1983; Vol. 46, c. 41.]. Instead, the number of BT call boxes has risen by 30 per cent., and now they work. Getting a telephone line in the 1970s, when the hon. Member for Wigan (Mr. Stott) was up his telegraph pole, was like trying to get an interview with the Pope. Now one can get a telephone in seven days.

It is not only in the utilities that privatisation has brought benefits. As a nationalised industry, British Steel was the world's largest loss-maker. Now it is the most efficient steel producer in Europe, and one of the best in the world. British Aerospace has overtaken state-owned Aerospatiale of France to become Europe's biggest defence and aerospace manufacturer. Unlike the French company, British Airways makes a profit. Rolls-Royce, on the borders of my constituency, has increased its share of the world civil aero-engine market from 10 to 30 per cent.

Best and perhaps most important of all, whereas in 1979 state-run industries were depriving hospitals and schools in Britain of £85 million a week—that is what they cost to run—the privatised industries are now contributing £55 million a week in taxes to our schools and hospitals.

Ms Church

What about the Post Office?

Mr. Deputy Speaker

Order. The hon. Lady cannot keep yelling the words "Post Office". I draw her attention to the amendment.

Mr. Oppenheim

I am glad that the Opposition chose to debate the Post Office, because we have a policy and they do not. We have a policy, because the past 16 years have shown that privatisation has resulted in more investment, better services and lower prices.

We have our policies in place. Now the Opposition, who called the debate, should say what their policy is. Tonight they have complained about the external financing limit. Let us hear what their policy is. I challenge the Opposition spokesman, the right hon. Member for Derby, South (Mrs. Beckett), to say whether a future Labour Government, if there is one, will reduce the external financing limit. Will she or will she not? Of course she will not.

I am told that a Labour party publication called Women Today recently held a competition inviting people to Win a day in Parliament—all you have to do is say in no more than 100 words what the policies and priorities of a Labour Government would be. Obviously we shall have to wait until those good ladies have returned their answers before we hear any clear policies from the Opposition.

As usual, all we have heard from the Opposition is motherhood and apple pie—political escalator muzak, meaningless waffle. But perhaps I am being unfair, because the Opposition are clear about one thing: the core values of new Labour's great visionary forward-looking project do not include an acceptance of the benefits of privatisation.

That sits oddly with Labour's stated desire to make new Labour more like Europe's social democratic parties. Over the past decade, privatisation has been accepted by social democrats in Sweden, Holland and Belgium. Even the socialists in France, Italy and Spain have accepted it. Even in Vietnam and Cuba, they are beginning to see the light. Who does that leave? It leaves new Labour and North Korea; the Leader of the Opposition and Kim Jong II walking in lockstep to oblivion.

I invite the House to reject the Opposition motion and support the Government amendment.

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

The House divided: Ayes 255, Noes 289.

Division No. 46] [10.00 pm
Adams, Mrs Irene Brown, N (N'c'tle upon Tyne E)
Ainger, Nick Bruce, Malcolm (Gordon)
Allen, Graham Burden, Richard
Anderson, Ms Janet (Ros'dale) Byers, Stephen
Armstrong, Hilary Caborn, Richard
Ashton, Joe Callaghan, Jim
Austin-Walker, John Campbell, Mrs Anne (C'bridge)
Banks, Tony (Newham NW) Campbell, Menzies (Fife NE)
Barron, Kevin Campbell, Ronnie (Blyth V)
Battle, John Campbell-Savours, D N
Bayley, Hugh Canavan, Dennis
Beckett, Rt Hon Margaret Chidgey, David
Beggs, Roy Chisholm, Malcolm
Beith, Rt Hon A J Church, Judith
Bell, Stuart Clapham, Michael
Benn, Rt Hon Tony Clark, Dr David (South Shields)
Bennett, Andrew F Clarke, Tom (Monklands W)
Benton, Joe Clelland, David
Bermingham, Gerald Coffey, Ann
Berry, Roger Cohen, Harry
Boateng, Paul Connarty, Michael
Bradley, Keith Cook, Frank (Stockton N)
Bray, Dr Jeremy Cook, Robin (Livingston)
Brown, Gordon (Dunfermline E) Corbett, Robin
Corbyn, Jeremy Jones, Barry (Alyn and D'side)
Corston, Jean Jones, leuan Wyn (Ynys Môn)
Cousins, Jim Jones, Jon Owen (Cardiff C)
Cummings, John Jones, Lynne (B'ham S O)
Cunliffe, Lawrence Jones, Martyn (Clwyd, SW)
Cunningham, Jim (Covy SE) Jones, Nigel (Cheltenham)
Dafis, Cynog Jowell, Tessa
Dalyell, Tam Kaufman, Rt Hon Gerald
Darling, Alistair Keen, Alan
Davidson, Ian Kennedy, Jane (L'pool Br'dg'n)
Davies, Bryan (Oldham C'tral) Khabra, Piara S
Davies, Chris (L'Boro & S'worth) Kilfoyle, Peter
Davies, Rt Hon Denzil (Llanelli) Kirkwood, Archy
Davies, Ron (Caerphilly) Liddell, Mrs Helen
Denham, John Litherland, Robert
Dewar, Donald Livingstone, Ken
Dixon, Don Lloyd, Tony (Stretford)
Dobson, Frank Llwyd, Elfyn
Donohoe, Brian H Loyden, Eddie
Dowd, Jim Lynne, Ms Liz
Dunwoody, Mrs Gwyneth McAllion, John
Eagle, Ms Angela McAvoy, Thomas
Eastham, Ken McCartney, Ian
Etherington, Bill McCartney, Robert
Evans, John (St Helens N) Macdonald, Calum
Ewing, Mrs Margaret McFall, John
Fatchett, Derek McKelvey, William
Faulds, Andrew Mackinlay, Andrew
Field, Frank (Birkenhead) McLeish, Henry
Fisher, Mark McMaster, Gordon
Flynn, Paul MacShane, Denis
Foster, Rt Hon Derek McWilliam, John
Foster, Don (Bath) Madden, Max
Foulkes, George Maddock, Diana
Fyfe, Maria Mahon, Alice
Galbraith, Sam Mandelson, Peter
Galloway, George Marek, Dr John
Gapes, Mike Marshall, David (Shettleston)
Garrett, John Martin, Michael J (Springburn)
George, Bruce Martlew, Eric
Gerrard, Neil Maxton, John
Gilbert, Rt Hon Dr John Meacher, Michael
Godman, Dr Norman A Meale, Alan
Golding, Mrs Llin Michael, Alun
Gordon, Mildred Michie, Bill (Sheffield Heeley)
Griffiths, Nigel (Edinburgh S) Michie, Mrs Ray (Argyll & Bute)
Griffiths, Win (Bridgend) Milburn, Alan
Grocott, Bruce Miller, Andrew
Gunnell, John Mitchell, Austin (Gt Grimsby)
Hall, Mike Moonie, Dr Lewis
Hanson, David Morgan, Rhodri
Harman, Ms Harriet Morley, Elliot
Harvey, Nick Morris, Rt Hon Alfred (Wy'nshawe)
Hattersley, Rt Hon Roy Morris, Estelle (B'ham Yardley)
Heppell, John Morris, Rt Hon John (Aberavon)
Hill, Keith (Streatham) Mowlam, Marjorie
Hinchliffe, David Mudie, George
Hodge, Margaret Mullin, Chris
Hoey, Kate Murphy, Paul
Hogg, Norman (Cumbemauld) Nicholson, Emma (Devon West)
Home Robertson, John Oakes, Rt Hon Gordon
Hoon, Geoffrey O'Brien, Mike (N W'kshire)
Howarth, Alan (Straf'rd-on-A) O'Brien, William (Normanton)
Howarth, George (Knowsley North) O'Hara, Edward
Howells, Dr Kim (Pontypridd) Olner, Bill
Hoyle, Doug Orme, Rt Hon Stanley
Hughes, Kevin (Doncaster N) Parry, Robert
Hughes, Robert (Aberdeen N) Pearson, Ian
Hughes, Roy (Newport E) Pendry, Tom
Hughes, Simon (Southwark) Pickthall, Colin
Hutton, John Pike, Peter L
Illsley, Eric Pope, Greg
Ingram, Adam Prentice, Bridget (Lev'm E)
Jackson, Glenda (H'stead) Prentice, Gordon (Pendle)
Jackson, Helen (Shef'ld, H) Prescott, Rt Hon John
Jamieson, David Purchase, Ken
Quin, Ms Joyce Stott, Roger
Radice, Giles Strang, Dr. Gavin
Randall, Stuart Sutcliffe, Gerry,
Raynsford, Nick Taylor, Mrs Ann (Dewsbury)
Reid, Dr John Taylor, Matthew (Truro)
Rendel, David Touhig, Don
Robertson, George (Hamilton) Turner, Dennis
Robinson, Geoffrey (Co'try NW) Tyler, Paul
Roche, Mrs Barbara Vaz, Keith
Rooker, Jeff Wallace, James
Rooney, Terry Walley, Joan
Ross, Ernie (Dundee W) Wardell, Gareth (Gower)
Rowlands, Ted Wareing, Robert N
Ruddock, Joan Watson, Mike
Sedgemore, Brian Wicks, Malcolm
Sheerman, Barry Wigley, Dafydd
Sheldon, Rt Hon Robert Williams, Rt Hon Alan (Sw'n W)
Shore, Rt Hon Peter Williams, Alan W (Carmarthen)
Short, Clare Wilson, Brian
Simpson, Alan Winnick, David
Skinner, Dennis Wise, Audrey
Smith, Andrew (Oxford E) Worthington, Tony
Smith, Chris (Isl'ton S & F'sbury) Wray, Jimmy
Smith, Llew (Blaenau Gwent) Wright, Dr Tony
Snape, Peter Young, David (Bolton SE)
Soley, Clive
Spellar, John Tellers for the Ayes:
Squire, Rachel (Dunfermline W) Mr. Eric Clarke and Mr. Robert Ainsworth.
Steinberg, Gerry
Ainsworth, Peter (East Surrey) Carttiss, Michael
Aitken, Rt Hon Jonathan Cash, William
Alexander, Richard Channon, Rt Hon Paul
Alison, Rt Hon Michael (Selby) Chapman, Sir Sydney
Allason, Rupert (Torbay) Churchill, Mr
Arbuthnot, James Clappison, James
Arnold, Jacques (Gravesham) Clark, Dr Michael (Rochford)
Ashby, David Clarke, Rt Hon Kenneth (Ru'clif)
Atkins, Rt Hon Robert Clifton-Brown, Geoffrey
Atkinson, David (Bour'mouth E) Coe, Sebastian
Atkinson, Peter (Hexham) Colvin, Michael
Baker, Nicholas (North Dorset) Congdon, David
Baldry, Tony Conway, Derek
Banks, Matthew (Southport) Coombs, Anthony (Wyre For'st)
Banks, Robert (Harrogate) Coombs, Simon (Swindon)
Bates, Michael Cope, Rt Hon Sir John
Batiste, Spencer Couchman, James
Bellingham, Henry Cran, James
Bendall, Vivian Currie, Mrs Edwina (S D'by'ire)
Beresford, Sir Paul Curry, David (Skipton & Ripon)
Biffen, Rt Hon John Davis, David (Boothferry)
Body, Sir Richard Day, Stephen
Bonsor, Sir Nicholas Deva, Nirj Joseph
Booth, Hartley Devlin, Tim
Boswell, Tim Dicks, Terry
Bottomley, Peter (Eltham) Dorrell, Rt Hon Stephen
Bottomley, Rt Hon Virginia Douglas-Hamilton, Lord James
Bowden, Sir Andrew Dover, Den
Bowis, John Duncan, Alan
Boyson, Rt Hon Sir Rhodes Duncan-Smith, lain
Brandreth, Gyles Dunn, Bob
Brazier, Julian Durant, Sir Anthony
Bright, Sir Graham Eggar, Rt Hon Tim
Brooke, Rt Hon Peter Elletson, Harold
Brown, M (Brigg & Cl'thorpes) Emery, Rt Hon Sir Peter
Browning, Mrs Angela Evans, David (Welwyn Hatfield)
Bruce, Ian (Dorset) Evans, Jonathan (Brecon)
Bums, Simon Evans, Nigel (Ribble Valley)
Burt, Alistair Evans, Roger (Monmouth)
Butcher, John Evennett, David
Butler, Peter Faber, David
Butterfill, John Fabricant, Michael
Carlisle, John (Luton North) Fenner, Dame Peggy
Carlisle, Sir Kenneth (Lincoln) Field, Barry (Isle of Wight)
Carrington, Matthew Fishburn, Dudley
Forman, Nigel Lloyd, Rt Hon Sir Peter (Fareham)
Forsyth, Rt Hon Michael (Stirling) Lord, Michael
Forth, Eric Luff, Peter
Fowler, Rt Hon Sir Norman Lyell, Rt Hon Sir Nicholas
Fox, Dr Liam (Woodspring) MacGregor, Rt Hon John
Fox, Sir Marcus (Shipley) MacKay, Andrew
Freeman, Rt Hon Roger Maclean, Rt Hon David
French, Douglas McNair-Wilson, Sir Patrick
Fry, Sir Peter Maitland, Lady Olga
Gale, Roger Malone, Gerald
Gallie, Phil Mans, Keith
Gardiner, Sir George Marland, Paul
Garnier, Edward Marshall, John (Hendon S)
Gill, Christopher Marshall, Sir Michael (Arundel)
Gillan, Cheryl Martin, David (Portsmouth S)
Goodlad, Rt Hon Alastair Mates, Michael
Goodson-Wickes, Dr Charles Mayhew, Rt Hon Sir Patrick
Gorman, Mrs Teresa Mellor, Rt Hon David
Gorst, Sir John Merchant, Piers
Grant, Sir A (SW Cambs) Mills, lain
Greenway, Harry (Ealing N) Mitchell, Andrew (Gedling)
Greenway, John (Ryedale) Montgomery, Sir Fergus
Griffiths, Peter (Portsmouth, N) Needham, Rt Hon Richard
Gummer, Rt Hon John Selwyn Neubert, Sir Michael
Hague, Rt Hon William Newton, Rt Hon Tony
Hamilton, Rt Hon Sir Archibald Nicholls, Patrick
Hamilton, Neil (Tatton) Nicholson, David (Taunton)
Hampson, Dr Keith Norris, Steve
Hanley, Rt Hon Jeremy Onslow, Rt Hon Sir Cranley
Hannam, Sir John Oppenheim, Phillip
Hargreaves, Andrew Ottaway, Richard
Harris, David Page, Richard
Hawksley, Warren Paice, James
Hayes, Jerry Patnick, Sir Irvine
Heald, Oliver Patten, Rt Hon John
Heath, Rt Hon Sir Edward Pattie, Rt Hon Sir Geoffrey
Heathcoat-Amory, David Pawsey, James
Hendry, Charles Peacock, Mrs Elizabeth
Heseltine, Rt Hon Michael Pickles, Eric
Higgins, Rt Hon Sir Terence Porter, Barry (Wirral S)
Hill, James (Southampton Test) Porter, David (Waveney)
Hogg, Rt Hon Douglas (G'tham) Portillo, Rt Hon Michael
Horam, John Powell, William (Corby)
Howard, Rt Hon Michael Rathbone, Tim
Howell, Rt Hon David (G'dford) Redwood, Rt Hon John
Howell, Sir Ralph (N Norfolk) Renton, Rt Hon Tim
Hughes, Robert G (Harrow W) Richards, Rod
Hunt, Rt Hon David (Wirral W) Riddick, Graham
Hunt, Sir John (Ravensbourne) Robatnan, Andrew
Hunter, Andrew Roberts, Rt Hon Sir Wyn
Jack, Michael Robertson, Raymond (Ab'd'n S)
Jenkin, Bernard Robinson, Mark (Somerton)
Jessel, Toby Roe, Mrs Marion (Broxbourne)
Johnson Smith, Sir Geoffrey Rowe, Andrew (Mid Kent)
Jones, Gwilym (Cardiff N) Rurnbold, Rt Hon Dame Angela
Jones, Robert B (W Hertfdshr) Sackville, Tom
Jopling, Rt Hon Michael Sainsbury, Rt Hon Sir Timothy
Kellett-Bowman, Dame Elaine Scott, Rt Hon Sir Nicholas
Key, Robert Shaw, David (Dover)
King, Rt Hon Tom Shaw, Sir Giles (Pudsey)
Kirkhope, Timothy Shephard, Rt Hon Gillian
Knapman, Roger Shepherd, Sir Colin (Hereford)
Knight, Mrs Angela (Erewash) Shepherd, Richard (Aldridge)
Knight, Rt Hon Greg (Derby N) Shersby, Sir Michael
Knight, Dame Jill (Bir'm E'st'n) Sims, Roger
Knox, Sir David Skeet, Sir Trevor
Kynoch, George (Kincardine) Smith, Tim (Beaconsfield)
Lait, Mrs Jacqui Soames, Nicholas
Lamont, Rt Hon Norman Spencer, Sir Derek
Lang, Rt Hon Ian Spicer, Sir James (W Dorset)
Lawrence, Sir Ivan Spicer, Sir Michael (S Worcs)
Leigh, Edward Spink, Dr Robert
Lennox-Boyd, Sir Mark Spring, Richard
Lester, Sir James (Broxtowe) Sproat, lain
Lidington, David Squire, Robin (Hornchurch)
Lilley, Rt Hon Peter Stanley, Rt Hon Sir John
Steen, Anthony Wakten, George
Stem, Michael Walker, Bill (N Tayside)
Stewart, Allan Waller, Gary
Streeter, Gary Ward, John
Sumberg, David Wardle, Charles (Bexhill)
Sweeney, Walter Waterson, Nigel
Sykes, John Watts, John
Tapsell, Sir Peter Wells, Bowen
Taylor, Ian (Esher) Wheeler, Rt Hon Sir John
Taylor, Sir Teddy (Southend, E) Whitney, Ray
Temple-Morris, Peter Whittingdale, John
Thomason Roy
Thompson Sir Donald (C'er V) Widdecombe, Ann
Thompson, Patrick (Norwich N) Wiggin, Sir Jerry
Thornton, Sir Malcolm Wilkinson, John
Thumham, Peter Willetts, David
Townend, John (Bridlington) Wilshire, David
Townsend, Cyril D (Bexl'yh'th) Winterton, Mrs Ann (Congleton)
Tracey, Richard Winterton, Nicholas (Macc'f'ld)
Tredinnick, David Wolfson, Mark
Trend, Michael Yeo, Tim
Trotter, Neville Young, Rt Hon Sir George
Twinn, Dr Ian
Vaughan, Sir Gerard Tellers for the Noes:
Viggers, Peter Mr. Timothy Wood and Mr. Patrick McLoughlin.
Waldegrave, Rt Hon William

Question accordingly negatived.

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

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

Resolved, That this House welcomes the substantial benefits which have flowed to customers from the Government's programme of privatisation; recognises that 19,000 of the 20,000 post offices in the United Kingdom are already in the private sector; and endorses the Government's continuing commitment to a universal postal service at a uniform and affordable tariff and a nationwide network of post offices.

  1. DEREGULATION 134 words
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