LIMIT ON LOANS AND OTHER ARRANGEMENTS WITH GOVERNMENT (Hansard, 27 July 2000)

§ Mr. Alan Johnson
I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker
With this it will be convenient to discuss Lords amendments Nos. 34 and 35, No. 66 and amendment (a) thereto, and Nos. 67, 121 to 125, 146, 153 and 154.

§ Mr. Johnson
These amendments relate to the financial and tax provisions in the Bill concerning the Post Office company, and to issues arising out of the transfer from the statutory corporation to the Post Office company.
Lords amendments Nos. 33 and 34 amend clause 71 to remove the Government's shareholding from the calculation of the Post Office company's indebtedness to Government while retaining in the calculation any debt securities issued to Government under clause 63. The amendments stem from an agreement in Committee in the Lords to consider further the inclusion of the Government's shareholding in the Post Office company in the light of Lord Dealing's amendment seeking to remove both the shareholding and debt securities issued to the Government from the calculation.
Lords amendments Nos. 67 and 146 deal with public records. Amendment No. 67 inserts a new clause recreating a power similar to that in section 75(2) of the Post Office Act 1969, to enable the Secretary of State to vest in the Post Office company the property in the records of the Postmaster General and to give directions to the Post Office company in respect of making those records available to the Crown for inspection and copying.
The order-making power in section 75(2) of the 1969 Act has never been exercised, so the vesting of the pre-1969 records remains an outstanding matter from that Act. Amendment No. 146 amends schedule 8 to bring the Consumer Council for Postal Services and the Post Office company into the scope of the Public Records Act 1958 when the bodies come into existence.
1377 Lords amendment No. 123 inserts a new paragraph into schedule 3 to ensure that the managers of welfare funds for persons who are or have been engaged in the business of the Post Office, and for their relatives and dependants, have the power to alter the funds to take account of the transfer of the Post Office to the Post Office company. The amendment maintains the rights of persons eligible for assistance under the existing funds.
Lords amendment No. 125 is a deeming provision with the effect that, on or after the appointed day mentioned in clause 62, the Post Office company will be treated for all purposes of value added tax as if it were the same person as the Post Office. That will mean, for example, that no charges will arise from changes to the Post Office company's VAT group simply as a consequence of the transformation into the company. Together with the other tax provisions in the Bill, the amendment will ensure that the transfer of properties, rights and liabilities from the Post Office to the Post Office company under clause 62 is tax neutral.
The remaining amendments are minor technical or drafting amendments that complete or clarify existing provisions in the Bill. I commend the Lords amendments to the House.

§ Mr. Bercow
The Opposition propose a small but significant amendment to Lords amendment No. 66. Our understanding is that there is a provision for loans to the Post Office and reference is made to the powers of the Secretary of State in that context. What foxes and perturbs my right hon. and hon. Friends is the provision that where sums are made available in currencies other than sterling For the purposes of this section equivalents in sterling shall be calculated as the Secretary of State considers appropriate. Our amendment would ensure that calculations were not made by the Secretary of State, but determined in accordance with the dictates of the market.
It seems curious that the Government wish to arrogate to themselves power for the Secretary of State to determine equivalents in sterling where other currencies are involved as their track record over several years is that whenever Ministers have been challenged, they have been very reticent on the subject of exchange rates. It genuinely perplexes me that now, instead of leaving these matters for market determination, they wish to arrogate to themselves the authority to make such judgments.
I shall not take the House through the litany of examples of occasions on which Ministers have been challenged. I remind the House of just one pertinent example, namely the proceedings of the Select Committee on Trade and Industry on 4 November 1998, the detail of which I feel sure is still firmly imprinted upon the mind of the then Secretary of State for Trade and Industry, now the Secretary of State for Northern Ireland. I specifically questioned him on the subject of exchange rates and the relevant issue of economic and monetary union, and whether it should be undertaken at exchange rate mechanism mid-rates. The right hon. Gentleman looked most perplexed and, after reflection, said that he thought that I was jumping a whole lot of hurdles very prematurely. I make the observation simply to underline the surprise of Opposition Members that the Government wish to determine these matters themselves.
1378 It could be that there is a peculiarly good reason why Ministers wish to be able to judge the equivalents in sterling where other currencies are made available, but it is not clear to me or to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning).
I suspect that, in addition to all his other claims to fame, the Minister for Competitiveness is a financial wizard of the highest calibre. His explanation will be comprehensive and compelling in equal measure, I hope. I wait to hear it.

§ Mr. Alan Johnson
Obviously, the hon. Gentleman has heard about my economics O-level.

§ Mr. Corbyn
My hon. Friend is boasting again.

§ Mr. Johnson
I am surprised that the hon. Member for Buckingham (Mr. Bercow) proposes an amendment that will have a very short shelf life as it would apply only to foreign currency loans made to the Post Office Corporation. Of course the corporation will cease to exist once the pic company comes into being—hopefully next year—after the Bill has received Royal Assent.
Lords amendment No. 66 to clause 109 has nothing whatever to do with the rate of interest applied to foreign currency loans. The hon. Gentleman did not raise that point, but it has been raised elsewhere. It merely provides that, for the purposes of calculating total indebtedness of the Post Office Corporation under clause 109, the Secretary of State will determine the sterling equivalent of any foreign currency debt. That is particularly applicable to the acquisition of German Parcels last year. The amendment ensures that clause 109 mirrors the provision in clause 71(4) regarding the determination of the sterling equivalent of any foreign currency debt for the Post Office company.
There is absolutely no doubt that market rates will be taken into account for the purposes of the calculation. The Government amendment creates the flexibility for sterling equivalents to be valued in different ways according to their purpose. It allows for foreign currency loans to be given a sterling valuation first by taking the prevailing exchange rate at the date of the loan for the purposes of measuring the Post Office's outstanding borrowing against its statutory limit, and secondly, by taking the prevailing exchange rate on the balance sheet date for Post Office and National Loans Fund accounting purposes. The key point is that market rates will be taken into account for the calculation. Opposition Members have nothing to fear in that regard.
For those reasons, I hope that the hon. Member for Buckingham will not press his amendment, and that he will accept that the Government amendments fully account for the questions that he raised.
Lords amendment agreed to [Special Entry]. Lords amendments Nos. 34 to 53 agreed to [some with Special Entry].