§ LORD STRACHIE had given Notice to draw attention to the obstacles put in way of telephone extensions in rural districts by making unreasonable charges for connecting houses with rural exchanges, in excess of the cost of making such connections: and to move for Papers. The noble Lord said: My Lords, to a very large extent telephone extensions in rural districts are blocked and hindered by the excessive charges to which I refer in my Question. There might be some excuse for such charges if the telephone system of the country was run at a loss, but I understand that, instead of a loss, there was at the end of the last half-year to March 31 a surplus on the telephone system of a quarter of a million. Therefore, I hope that no excuse of that sort will be advanced by the noble Earl who represents the Post Office in your Lordships' House. What is the present position regarding telephone exchanges in rural districts? It is laid down in the Regulations that within a mile and a half of an exchange or measuring point the annual charge is £ 5 a year. That is a fixed charge, in addition to which, of course, there is a large revenue arising from the fact that you have for all practical purposes in rural areas to pay 2d, or 3d, or even more, every time you make a call on the telephone.
§ Another matter I have to complain of much more strongly is that for every furlong beyond the one and a half miles from the local exchange £ 1 per annum is charged; that is to say, that you have to pay, in addition to the £ 5, £ 8 a year for every mile beyond the one and a half miles allowed. There might be some reason for that additional charge though it seems to be a very considerable sum. This is a very big question and the noble Earl to whom I have given a certain amount of information will correct me if I am wrong. I asked him whether it is not the case that, as I had been credibly informed, in large towns like Birmingham, Liverpool and Manchester, a person who lives even as much as half a mile or a 888 mile beyond the one and a half miles allowed is not charged anything in respect of the extra distance. I shall be glad to learn whether that is so or not.
§ Another grievance from which persons in rural districts suffer has been brought to my knowledge. It is that, although telephone poles and wires may be actually passing the house to which you wish to have the telephone extended, you are charged exactly the same as if there were no poles or wires within a distance of a mile and a half. May I quote from what was said by a correspondent last month in the Star newspaper regarding a case in which the wires were actually carried into the house, but the occupiers were without a telephone because the rental alone would come to nearly £ 30 a year. The line was lying idle because no arrangement could be come to with the Post Office. An ordinary business firm, it was said, would soon have come to a satisfactory and paying compromise. But the Post Office proceeds on the hard and fast rule that if you are beyond the mile and a half limit you must pay, as I have already said, at the rate of £ 1 a year for every furlong of extra distance. No consideration is given at all to the fact that poles and wires pass close to the house of the person who wishes to have the telephone installed and that, consequently, very little extra cost is involved in connecting the telephone.
§ May I be permitted to mention a case from my own district in Somerset? A Mr. Popham lives in a house which is about a quarter to half a mile from that of his tenant. Both are connected by a private line, and Mr. Popham's house, Hunstrete House, is also connected with the Post Office telephone at Temple Cloud, which is in the Bristol district. Mr. Popham was refused a connection with Timsbury because it is in the Bath district. He offered the use of his own posts to the Post Office, but the offer was refused as they did not come up to their requirements. His tenant is to be connected with Timsbury, and owing to the cost of construction the agreement has to be for a term of five years at a rental of £ 16 10s. Suitable posts could be erected on Mr. Popham's route which would shorten the distance to a quarter of a mile instead of the one and a half miles proposed by the General Post Office. I have 889 given that information to the noble Earl who represents the Post Office in your Lordships' House and there may be some explanation of the circumstances; but to the ordinary man it seems very unreasonable indeed that a person should be put to all this extra cost for no apparent reason except that the Post Office says that the telephone would be in the Bristol district in one instance and in the Bath district in the other.
§ The Central Landowners' Union, which, as your Lordships are aware, is a body of great importance and to which, indeed, many of your Lordships belong and some are members of its Council, unanimously resolved at a council meeting within the last few days to support my Motion on the ground of a complaint received from a member, Mr. S. F. Bartlett, of Brackley. Mr. Bartlett informed the council that he proposes to share a line with three other farmers, each paying £ 10 a year or a total of £ 40 a year. Should one or more of the four cease to subscribe the others are responsible for the £ 40 for three years. The Brackley exchange is only four miles from Mr. Bartlett, who is the farthest off of the four farmers, and the wires are only about 500 yards from his house. His other alternative is to have a private line to his nearest exchange, which is at Syresham, two and a-half miles from him, at a rental of £ 14 a year. These farmers are asked to pay £ 40 a year for three years and if any of them fall out for any reason the others will be responsible for the payment of that amount for that period of time. It seems very unreasonable that an ordinary tenant farmer should have to do that or in the alternative have a private line. The proposed line is what is known as a party line, and, as your Lordships know, that is very inconvenient in an agricultural district if any of the parties fall out, because it is possible for them to learn from it what is being said, or the prices that may be arranged, and what not. Yet all those restrictions are to be laid upon these people. The sum of £ 40 is additional, of course, to any revenue which would be derived by the Post Office from the calls which would be made.
I have received a great many letters from private individuals complaining of the cost to which they have been put in connection with telephones. Among them
I have a letter from the Vicar of King's Bromley, Burton-on-Trent, who says:—
I feel sure that the following facts may be of service to you: I am about one and a half miles from the exchange and I am charged as follows— Rental per annum, for a party line, £ 9 10s.; additional for all night service, £1; additional for extension bell, 6s.; total, £ 10 16s
May I refer also to information given to me as the result of some rather interesting advertisements inserted in The Times by the Telephone Development Association, and which I daresay your Lordships have seen. They draw my attention to a Report made by a Select Committee on Telephones of the House of Commons in 1922, which was presided over by a distinguished member of the House of Commons. What did that Select Committee say in their recommendations in 1922? Put shortly, they said the setting aside of £ 200,000 annually for extra depreciation should be discontinued and ordinary depreciation should be revised: the result would be a saving of £ 270,000 in 1922–23. Probably it would be a great deal more now. No doubt the noble Lord is acquainted with this Report of the Select Committee of the House of Commons on Telephones and this has been brought to his notice. Perhaps he may be able to tell us that that recommendation has been carried out.
§ Further, the Select Committee goes on to recommend that salaries and overhead charges for new construction should be charged to capital and not to revenue, saving £ 400,000 a year. I think your Lordships will agree that the recommendation of the Committee is a reasonable one and should be carried out. The telephones are a trading concern. They were taken over from the National Telephone Company and ought to be conducted on ordinary business lines. It is not right to charge to revenue what really is capital expenditure. The Committee report that these two recommendations together would probably save at least eight per cent of the existing charges. I should like to draw your Lordships' attention to the difference between this country and America in this matter. In England we have had £ 70,000,000 of capital expenditure on telephones serving 60,000 subscribers, while in America they have a capital expenditure of £ 700,000,000 on telephones serving 400,000 891 persons. It is interesting to note that in the City of New York there are actually more telephones than there are in the whole of Great Britain.
§ I should like to touch upon the employment aspect of the matter, because that is of great importance in these days. The extension of the telephones would offer a great deal of employment. Every million pounds invested gives employment, it, is calculated, to 6,500 persons. Such an expenditure would mean something like 12,000 persons using the exchanges and would produce a net revenue of £ 16,000 a year. That shows that the expenditure would not be unremunerative. I do not want for a moment to blame the Post Office in this matter. I am perfectly certain that the Postmaster-General is most anxious to do everything he can for us in agricultural districts, whether we are landlords or farmers or trades people. There is no doubt that in ordinary business in these days the use of the telephone is of very great importance. I cannot help thinking that, the real difficulty is the Treasury. We are very much obliged to the Postmaster-General for the assistance he has given to agriculturists by introducing the cash-on-delivery system. Not only is it very useful to agriculturists, but it is also very useful to people living in rural districts. I hope the noble Lord will represent this grievance to the Postmaster-General and that the Postmaster-General may be inclined to approach the First Lord of the Treasury, the Prime Minister, on this subject.
§ I am emboldened to think that it might not be without success because agriculturists and those who live in rural districts appreciate very much the way in which the Prime Minister has shown a desire to assist us in many directions. The other night the Prime Minister said that a great deal could be done by giving facilities to agriculturists in rural districts and that the Government were anxious to do this. I venture to say to the Government that this is one of the cases in which the Prime Minister might be able to give this assistance. I have a Motion on the Paper for Papers and I hope the noble Lord will be inclined to assent to that Motion. I desire a Return showing the income derived from the Telephone Service, the interest received 892 from capital expenditure, the capital expenditure in towns and the capital expenditure in rural areas. I beg to move.
§ LORD OLIVIER
My Lords, I have no doubt many of your Lordships have had more experience than I have had of the sides of the telephone question that affect both the consumer and the Government, as distributor, but I have had some experience of both. I was very much interested in the telephone question when I was at the Board of Agriculture where we made efforts to extend telephone facilities to farmers in this country. I have also had experience of telephones in other countries and the Colonies. I have always been immensely impressed by the extraordinary difference in the amount of use made of the telephones in almost every other country in the world as compared with this country and the amount of use that made of telephones by farmers and planters in the Colonies as compared with farmers in this country. I know that telephone systems in Switzerland and other countries are installed in a more cheap and rough-and-ready fashion than we venture to instal them in this country and that may account for the cheapness; yet, on the whole, the facilities are supplied to customers very much more cheaply elsewhere than they are in this country.
The fact is, as the noble Lord has said, that the Treasury have for very many years been in considerable difficulty in regard to extending the telephone system. The system under which telephones are now run in this country is one which is subject to very strict and rather onerous financial limitations. But in this country, on the part of the Treasury and I may say of the Civil Service generally, for very many years there was a permanent hostility to the telephone. For many years in the Colonial Office we had no telephone at all because it was thought to be an American invention. During many years that I was at the Colonial Office there was a telephone in one obscure cupboard on the first floor. At any time that any member of the staff was rung up he had to be sent for in his office and had to go down to this obscure cupboard to speak on the telephone. I think the late Mr. Joseph Chamberlain was the first statesman at the Colonial Office who succeeded in abstracting from the Treasury a desk 893 telephone for his private secretary and afterwards desk telephones for his assistant secretaries. That was the temper in which our official regulators always regarded the telephone.
I do not want to press that argument too much, because I know that at the present time the Post Office are very much more liberal than they used to be and their servants in the country are very courteous and desirous of giving what facilities the Department can give. But they continually tell us: "We are governed by the Regulations" Of course, in a huge business like this, you have to be governed more by general Regulations, possibly, than they have to be in the smaller Colonies with which I have had to do. There we could deal with particular cases on their merits, whereas here you have to be governed by Regulations.
I should like to give your Lordships one instance of the way in which the Post Office throws away money. When I was Secretary of State for India I said that I must have a telephone in my private residence and the telephone was put on at the same time in the village for two gentlemen who were put on a joint telephone. The Post Office men laid the telephone past my house, took it over my land and fixed it. They then took the line down the village and next brought it back again to a number of my neighbours. Then they charged me £ 16 a year and my neighbours £ 13 a year because the wires had to be taken round a corner and to be brought back again. The reason was that my neighbours came within the three miles limit whereas I was three and a half miles away. My two neighbours had a joint telephone for about £ 6 10s, and I had a joint telephone with the India Office for about £ 8 2s, 6d. a year each.
When I relinquished office as Secretary of State for the Colonies I did not wish to keep on the double telephone, and asked that it should be taken off. While they were willing to do so, they pointed out that the contract enabled them to bind me. I said: "I will willingly go on paying £ 8 2s, 6d, a year, although my neighbours are only paying £ 6 10s, if you will accept it. You have the wires laid, and it does not cost any more to maintain a line for me than for the other two." But they said they 894 could not do it because of Regulations, and they returned the £ 8 2s, 6d, simply because I could not get another farmer to go in with me. That seems to me to be acting too strictly according to Regulations and instructions.
It may have been reasonable to take the extension in the way they did as being nearer, but surely consideration might have been given to me when I was bearing a higher share of the initial cost of the extension. And surely it was not good business to turn away an adequate rental,£ 8 2s, 6d a year, which would amply pay the cost of my telephone apart from the weekly fee, simply because I could not get another man to come in and share with me. Such an amount of red-tape, I am quite sure, is costing the nation a good deal of revenue which might otherwise be brought in. I know the difficulty, having been responsible for telephone administration, but I do say that there is a great deal of waste of opportunity in this country and a great. loss to farmers from not having facilities for telephones. A more sympathetic attitude possibly on the part of the Treasury and greater power of discretion on the part of officials in the Post Office might improve the situation very considerably. I beg to support the noble Lord's Motion.
§ THE EARL OF LUCAN
My Lords, have to thank my noble friend Lord Strachie for his courtesy in giving me particulars of the Question which he proposed to ask this afternoon. We all know how whole-heartedly the noble Lord supports the cause of farmers and of agriculture not only in his own country but in the country generally. It is possible that my answers may not altogether satisfy him, that I may not be able to go quite as far as he wishes in the information that I can give him, but he may be satisfied that the Post Office have always in mind the interests of agriculture and their great object is to make the Telephone and Postal Services in rural areas as cheap as possible.
The noble Lord, in his Question, speaks of unreasonable charges for connecting houses with rural exchanges in excess of the cost of making such connections. That is really not quite the case. The fact is that the service is provided in rural districts at rentals which do not cover the cost of providing and maintain- 895 ing the service. There is no fee charged for the initial installation; the cost is recovered by means of the annual rental. I have full particulars of the scheme to which the noble Lord referred— the rural exchanges 1922 scheme— but as he has already given your Lordships particulars of it I need not go into it further. My information, I am afraid, is rather against the Post Office. It is that where a minimum of eight subscribers can he obtained the rate is £ 2 per quarter or £ 8 per year, and not, as I think the noble Lord said, £ 5.
§ THE EARL OF LUCAN
That is the party-line system. I am speaking of the rural exchanges system started in July, 1922, under which exchanges in rural districts were opened provided a minimum of eight subscribers could he obtained at the rate of £ 8 per annum. If fifteen or more were forthcoming the ordinary tariff rental was reduced to £ 5 10s, per annum. That was within a radius of one and a half miles from the exchange. In cases over a mile and a half from the exchange the rate for the extra mileage is, as he said, £1 a furlong per annum. I may say that under that scheme since its inception nearly 900 small rural exchanges have been opened, serving some 14,000 subscribers. The capital expenditure involved has been approximately £ 21,090,000 sterling. As I have already said the rates charged are insufficient to cover the cost of installation and maintenance, and the average loss on each exchange amounts to £ 50 per annum, or over £ 3 10s, per subscriber. That is on the rural exchanges.
The other system to which the noble Lord referred is called the rural party-line service. That is a line for which farmers can join at a rental of £ 4 per annum, the conditions being that there must be at least two subscribers for each mile of circuit beyond a radius of half a mile. We admit that subscribers have the disadvantage of not obtaining the same privacy in talking, but the service is provided at a cheaper cost. One line is common to all the subscribers, and the line forks out opposite their different houses. The Post Office has had inquiries made in the district and county of which the noble Lord has special knowledge and 896 in the constituency which he represented with distinction for so many years, and he may be interested to know the number of exchanges and subscribers in that district. In the Bristol district there are 9 new rural exchanges serving 141 subscribers, and in Somersetshire, outside the Bristol district, there are 13 rural exchanges serving 304 subscribers. The number of rural party-lines in the Bristol district is 59, serving 457 subscribers, and in the remainder of Somersetshire the number is 24, serving 237 subscribers.
The noble Lord has mentioned this afternoon the case of Mr. Popham. I think the grievance is that Mr. Popham at Hunstrete House, Pensford, Bristol, and his tenant at Hunstrete Cottage have a private line between the two but that the Post Office cannot link up Mr. Popham's tenant through his house with the exchange at Temple Cloud.
§ THE EARL OF LUCAN
The answer to that is that when Mr. Popham had his telephone put in there was no exchange at Timsbury and Mr. Popham was put on to the nearest exchange at Temple Cloud. There is no information that Mr. Popham has ever tried to be connected with Timsbury. He remained connected with Temple Cloud and for certain necessary reasons his tenant had to be connected with the other exchange at Timsbury. The point is that if the tenant had applied for a telephone at the same time as Mr. Popham had his telephone installed there would have been no difficulty in his being put on to the same line to Temple Cloud. There was then plenty of room. The line is a big line, which includes a trunk line for part of the distance and carries fifty-eight wires. The reason for not being able to put the tenant on it is that the line is now full and there is no room. There are certain poles which the Post Office do not consider suitable, and if the tenant were put into the same exchange as the landlord it would really cost more money because a new line would have to be made.
With regard to the question of the party-line exchange, the condition is that there must be two subscribers for each mile beyond the half-mile radius. The noble Lord referred to a case of four 897 farmers who would have to contract to pay £ 10 a year for five years to make up the £ 40. I think the exchange would be nearly five miles beyond the half-mile radius, and accordingly that extra charge has to be made. The noble Lord referred to an existing pole route within 500 yards of Mr. Bartlett's house, but the Post Office maintain that this makes no difference and that they must charge on the average of the cost all through the country. Otherwise the situation might be that you might have two people living side by side and paying entirely different rentals. It is found that the fairest system is to distribute the cost over the whole of the country and charge the average cost for each rental. The noble Lord also asked a question with regard to mileage in big towns. I understand that the conditions are absolutely identical in rural and urban areas and that extra mileage is charged at the rate of £ 1 per furlong per annum for any rental over one and a half miles from the exchange.
London is exceptional in that in the Metropolis the question hardly arises. There are a few cases on the extreme frange where extra mileage is calculated, but as the population grows new exchanges will be provided and these will probably disappear. The noble Lord was good enough to inform me that he intended to ask a question about interest charges in regard to the estimates of rental required for an exchange in a rural area. He did not raise that point, bat he may be interested to know that in respect of subscribers' lines and apparatus and the apparatus at the exchange the interest on this capital expenditure is at present being charged at 4¾ per cent. Interest on the capital expenditure in connection with the junction circuit to connect the exchange to the existing telephone system, which is often a very considerable item, is also reckoned at 4¾ per cent., but this charge is set against the income derived from calls which, in addition, is intended to cover the cost of operating. I may say with regard to the actual rentals in rural and urban areas that, since these are based on the average costs throughout the country and not on the actual cost in the particular area in question, this materially favours subscribers in rural areas where costs are above the average. I think that. I have replied to all the questions that the noble Lord asked. In regard to the 898 observations of the noble Lord, Lord Olivier, I do not suppose that he wants any further inquiries to be made on the point, that he raised, and I am afraid that I cannot give him any information.
§ LORD OLIVIER
I did not wish any further inquiries. I raised the point simply to illustrate the fact that money is turned away.
§ THE EARL of LUCAN
As regards the question that was asked me concerning the Telephone Development Committee, I did not know of any new question that had come before that Committee, but I will make inquiries. I think that I have shown that the Post Office carry on their work to the best of their ability. As the noble Lord said, they are rationed like other Departments, and, naturally, expenditure has to be very much curtailed, but I am certain that their great object is to make the Telephone Services as cheap and as easy as possible in rural areas. I shall riot fail to bring my noble friend's representations to the notice of the Postmaster-General, and I can assure him that they will receive the most careful consideration.
§ LORD STRACHIE
I am much obliged to the noble Earl for the information he has given to me, but he did not say whether he was willing to give the Return that I asked for. Perhaps he may not be able to give the answer for a moment and will allow me to communicate with him.
§ LORD STRACHIE
I think the only question the noble Earl did not reply to was that which I asked with regard to capital expenditure. It was said that they set aside £ 200,000 annually for extra depreciation and it was recommended that that should be reconsidered. He did not tell me whether that recommendation had been accepted. Further it was said that unless discontinued the ordinary depreciation should be reduced. Of course it is no doubt very proper that depreciation should be taken into account, but the Select Committee said that a great saving on the charges could be effected if that were not done.
899 It is clear from what the noble Earl said that what we are suffering from at the present moment is the nationalisation of the service, because when we had the National Telephone Company we had quite as good a service and at much less cost. That is shown, I think, also by the fact that at the present moment the municipality of Hull has its own telephone service, which is worked by the Corporation under a licence from the Postmaster-General, and they report a profit of £ 11,400 a year after paying royalties to the Government. That shows that private enterprise is evidently much better than Government enterprise. It is an object lesson showing what would be the effect of further nationalisation of general services in this country. I hope the Government will take note of that.
The noble Earl did not answer my question whether it is not very unfair that a telephone user should have to pay for expenditure on the erection of poles and wires when those poles and wires are actually in existence close to his house. That is because of the red tape which exists. No distinction is made by reason of the fact that a man has already poles and wires erected just outside his house. He has to pay the same as a man has to pay where the wires and poles have to he brought a long distance to his house. I thoroughly appreciate the courtesy of all the officials with whom I have had to deal in this matter of telephones. I am not complaining for one moment in regard to them, but I am complaining of the red tape with which the Service is bound up, and of the way in which the Treasury prevent the extension of the telephones, to the great disadvantage of the rural districts. I hope the noble Earl will represent this to the Postmaster-General and get the Postmaster-General to represent to the Treasury that this money, which is the surplus on the Telephone Service, might very well be applied to giving greater facilities in rural districts.
§ THE EARL OF LUCAN
I think I did reply about the poles being near to a man's dwelling. I said that the charges were always based one average costs and did not give any advantage to anybody who had the luck of having poles and 900 wires already close by. It is found to be more advantageous to everybody to average the cost throughout the country.
§ Motion, by leave, withdrawn.