TELEGRAPH BILL (Hansard, 19 June 1951)

§ LORD ARCHIBALD
My Lords, this is such a short and simple Bill that it requires very few words from me in submitting it for your Lordships' approval. I could have wished that the first Bill which I had the honour of submitting to your Lordships' House might be of a more cheerful nature, but this Bill, unfortunately, is a necessity. I will take only a few minutes, and will not at this stage try to present all the arguments that might be advanced. The purpose of the Bill, as set out, is to increase the maximum rate for ordinary written telegrams. Naturally, it is with the deepest regret that the Postmaster-General has found it necessary to ask for an increase in telegraph charges; but as to the necessity for an increase there can be little, if any, argument. The Post Office commercial accounts for 1949⁃50 show that the telegraph service suffered a loss in that year of some £4,400,000; for 1950–51 it is estimated that the loss will be about£5,000,000—and further wage increases recently awarded, and other rising costs, may, indeed, make the loss rather more than that. There can be no question of raising charges to an extent which would enable the service fully to pay its way. Such an increase would make telegraph charges prohibitive and would bring the service practically to a standstill.
As noble Lords will see, Clause 1 increases the maximum rate, and new statutory regulations, which will be laid after this Bill is passed, will prescribe that rate—namely, 1s. 6d. for a telegram of twelve words, minimum charge, plus l½d. for each additional word. The present rate is, of course, 1s. for nine words, and ld. for each additional word. These revised charges are expected to reduce the deficit by about £450,000 in a full year. They therefore do no more than, if as much as, to bring the deficit back to around the 1949–50 level. These increased charges are particularly regretted because it is recognised that the telegraph service is 163 widely used by the poorer of our people when urgent messages have to be sent, often in time of trouble. For their sakes, amongst others, the service must be maintained and its charges kept as low as possible. Moreover, the telegraph service is still of considerable value to the business community, and is a vital means of communication in times of emergency. It must therefore be maintained, although it has operated at a loss for many years. With the increase in the use of the telephone, which cuts into the field of the telegram, the telegraph service is unlikely ever in the future to be able to pay its way. Much has been done, and is being done, to cut the operating costs of the service and to improve its efficiency and attractiveness.
I do not think I need detain your Lordships with the details of the increased costs—wages, materials, and so on—which, despite the economy measures, make increased charges necessary. Nor need I go into details of the economies, which are mainly in the field of mechanisation. There is a grain of comfort, however, which I can offer to noble Lords. Even with the increased charges provided for in this Bill, the cost of sending telegrams in this country still compares favourably with the cost in many other countries—for example, the United States, Canada and France. It is not too easy to get exact comparisons, because of differences in the methods of charging—for example, in some countries there are higher rates for longer distances—but a fair test might be the cost of sending a fifteen word telegram between places, say, 150 miles apart. In the United States the cost is 70 cents; in Canada it is 45 cents, if it is within a State, and 65 cents if it is inter-State; and in France it is 180 francs. With the proposed new charges that telegram would cost 1s. 10½d. here. Whether one takes the current rate of exchange or the pre-devaluation rate, the cost in this country is less than it is in the three countries I have quoted. The comparison is: in the United States, 5s., against our 1s. 10½d. at the present rate, Or 3s. 6d. against our 1s. 10½d. at the pre-devaluation rate; in Canada, within the State, 3s. 0d., or 2s. 3d. at the present rate of exchange, as against our 1s. 10½d.; and in France, 3s. 8d. as compared with our 1s. 10½d. As I said in opening, this Bill does not provide for a scale of 164 additional charges which would enable the service to pay its way—that would be impossible. What it does is to provide for a modest sum—the estimate is £450,000—to meet the rising deficit. It is on that basis that I commend this modest Bill to your Lordships, and beg to move that it be now read a second time.

§ LORD DE L'ISLE AND DUDLEY
My Lords, I should like to preface the few remarks I have to make upon this small Bill by congratulating the noble Lord who has just sat down on making his maiden speech from the Government Front Bench. He has used an economy of phrase which justifies his Scottish ancestry and augurs well for his future in our House. This Bill is simple, though unwelcome, and I think it raises points rather more important than those upon which the noble Lord has touched. It raises certain points about both Post Office finance and general economic problems. First of all, as the noble Lord has said, the new rates for inland telegrams will provide about £300,000 in the present financial year, and £450,000 in a full year. As the noble Lord has made clear, this adjustment will not in any measure make up the deficit which exists in the telegraph service—at least as published in the commercial accounts of the Post Office. The alteration is a general alteration or adjustment on postal, telephone and telegraph rates, and I think we ought (I hope that I shall not be trespassing on the rules of order) to consider the general rise in Post Office rates.
The effect of these general adjustments of rates is estimated to be something over £5,000,000 in the financial year 1951–52, and £8,000,000 in a full year. On first view, the innocent would think that this great national commercial concern must be running at a loss; but that is not so. I have done my best to study the rather complicated accounts of the Post Office, and I find that in 1948–49 there was a surplus of something like £15,000,000; in the year 1949–50 nearly £14,000.000; and there was an estimated surplus for 1950–51 of £11,000,000. One might well ask: Is it possible that 165 the Government, who are always preaching to private industry the limitation of profits, can justify piling another £8,000,000 on its existing profits at a time like this? I think we should remember that what is sauce for the private goose never seems to be sauce for the public gander. In fact, the Post Office leads a double life. In the market place it parades itself as a hard-faced, tough business man. But in its domestic life it is the powerless and cringing creature of the Treasury. It is not allowed to keep its own bank account. It has to bring all its earnings home to mother; and mother pays the bills, and makes the "young hopeful" work for the rest of the family for nothing. The proud service turns out to be purely a notional figure.
The Post Office keeps a record of what it does for the Departments of State, but the bills are never paid. Indeed, according to the Estimates, the value of the services provided for other Government Departments in 1951–52 will be in the region of £22,000,000 or £23,000,000. The point is—and I think it is an important point—that since 1943 the charges which the Post Office makes upon other Government Departments are not included in the Estimates for those services. Since the Treasury look upon the Post Office as a revenue department, just like Customs and Excise, the Post Office, in increasing its charges, is increasing the general revenue. So the Postmaster-General is put up a week before the Budget to raise the revenue for the National Exchequer by increasing the general charges of the postal services. In my submission, it would be a better way of reckoning the National Exchequer if the charges for postal services undertaken by the Post Office on behalf of the Departments were included in Government Estimates, and had to be borne by the body of general taxation. To take a parallel, why should not the charge for nationalised electricity, coal or gas be considered in the same way? Why should the Post Office services he treated in a different manner?
I am not speaking here entirely for myself or my Party, because other independent persons have uttered the same views. Very much the same view was expressed, although more guardedly, by the Comptroller and Auditor-General in his comments on the Post Office Accounts, 1948–49; while the Select 166 Committee on Estimates in another place made a similar recommendation in their Report in 1950. Because these recommendations have not been adopted, the users of Post Office services have to pay not for the value of the service, plus a fair profit, or even the value of the service plus a fair profit plus an ad valorem duty, such as purchase tax; they have to meet a concealed subvention of Government Departments which has never received due Parliamentary scrutiny. I cannot help thinking that the present system of Post Office finance—and this is not a Party matter but it is a matter of great importance—is a retrograde system.
In 1932, a Committee under the late Lord Bridgeman made a Report. In that Report it was suggested that the Post Office should make an annual contribution of something over £10,000,000, and should retain a balance as a reserve on which it could act and deal in a far more businesslike method rather than that it should be regarded purely as a revenue department. I think those who have studied the Select Committee's Report will see that senior officials in the Post Office valued the freedom which would have been allowed them, following the creation of such a reserve fund. Certainly the Postmaster-General, in certain views to which he gave utterance this year, seems to have supported that view; and I think he was right. The Post Office should have more freedom of manœuvre. Yet, poor man! the Postmaster-General had to "toe the line" a week before the Budget and increase the charges for the Post Office services, which increase went directly into the Treasury pocket.
I submit that in a great commercial concern like the Post Office, telegraph rates should be fixed in accordance with commercial considerations. It has been clearly shown by the noble Lord that at present the telegraph service is making a great deficit. But he did not tell us (I am sure he did not wilfully conceal the fact; perhaps he felt it was not relevant to this small Bill, although it is to the whole question) that the telephone service is making a very large surplus. I do not quarrel with that, but in my submission those two should be closely integrated. The evidence before the Committee indicated that the telegraph service is obsolescent, and that in its functions it must work in very close 167 harmony with the telegraph service. In fact, as long ago as 1932, when the Bridgeman Committee reported, they favoured a tele-communications set-up. Therefore, when we are considering telegraphs we must consider them in the light of telephones as well. It is a well-known commercial practice that you may have an obsolescent line of goods, so to speak, which you have to support by a new and expanding one. Now, my Lords, the telegraph revenue in 1950 was rather over £6,000,000, and the telephone revenue for the same period was something like £89,000,000. If we combine the turnover of the two in 1949–50—which is the latest period for which I have been able to obtain figures—we find that the revenues of telephones and telegraphs total about £92.000,000. On that turnover, the Post Office made a surplus of something over £14,000,000—that is to say, about 14½ per cent.
I think those are the figures which ought to be considered when telegraph rates are fixed. The matter ought not to turn upon the revenue for a particular year. The telephone service is one in general public demand. It is an expanding service; and like the motor car, television and other things, it is becoming part of our lives. It is enjoying an increasing revenue, and it is not unfair that it should carry the cost of this obsolescent side of tele-communications. Therefore, it is not in the light of the dwindling telegraph revenue but of the generally increasing tele-communication services that we ought to regard an increase in rates. It is true that expenses are rising, but, as the noble Viscount, Lord Samuel, said in a debate the other day, quoting a private tractor maker, when you have a service which is in general demand you have to pay every attention to effecting economies in the service, and to increasing revenue, in order to carry the burden of rising costs.
The Post Office is in this difficulty: that something like 10 per cent. of its services are given to the Departments, who do not pay and have no incentive to economise. The general consumer has to bear the extra burden. In my submission, the Post Office should be considered as a commercial concern, and those in charge of its affairs should be given every incentive to regard themselves as a business. They should be constantly thinking how, 168 by increased efficiency and expanding revenues, they can avoid increased charges to the public. They should think, not from year to year but in periods of years. They should be given as great financial latitude as possible so that they can plan. This is not the case at present. Although we on this side of the House shall not oppose the increased charges—much as we regret them—we feel that we cannot allow this Bill to pass without considering these various elements in this most important part of our national economy. I am not happy that under the present set-up the public are getting either the most efficient or the cheapest possible service. I make no reflection upon the Post Office officials or staff. I think it is the responsibility of the Government to see that the technical and financial set-up of the Post Office is so arranged that it is not the milch-cow of the Treasury, but that it is a businesslike, efficient and technically up-to-date service —the best service which can be rendered to the public at the cheapest rate.

§ LORD ARCHIBALD
My Lords, the noble Lord will not expect me to follow him on the general argument of the propriety of other Departments paying charges to the Post Office for services for which they do not at present pay. That is a big subject on which we may not find ourselves very far apart—but it is obviously outside the scope of this Bill. These increased charges provided for by the Bill cannot be said to be going in the direction of swelling the general Exchequer revenue, as the noble Lord seemed to suggest. They do not, in fact, entirely succeed in meeting the increased costs of the services; and to that extent it can be said that, despite these increased charges, the Post Office telephone and telegraph services are in large measure being regarded in exactly the way as the noble Lord recommended—as being combined services whereby the profits of the telephone service are, in fact, meeting the losses of the telegraph service.
But there is one point which has to be considered. This telegraph service may be obsolescent, but as it declines it is necessary to consider whether its losses should be allowed to be met out of the profits of the expanding department, or whether they should he reflected by a measured and balanced increase in the 169 charges so that there is not an undue burden on the expanding telephone service. It is a question whether that burden should be always increasing or whether it should he held in check by some modest increase in the charges for the obsolescent service such as are proposed in this Bill. No one regrets the necessity for the Bill more that I do: no one in these days can possibly like recommending increased charges. But I am afraid this is a case of disagreeable necessity, and I hope, therefore, that the House will accept the Bill.