§ 2.42 p.m.
§ THE EARL OF LUCANMy Lords. I beg to ask the Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether they have yet come to a decision as to the steps to be taken to reduce the deficit on the Inland Telegraph Service.]
§ THE POSTMASTER GENERAL (EARL DE LA WARR)As your Lordships are aware, the financial position of the Inland Telegraph Service has been getting steadily worse since the war. I warned 54 the House on 29th July last year that, so far as I could see, after making every allowance for every possible economy in working, we might well find ourselves faced with a choice between a continuing heavy subsidy from the users of other Post Office services or higher charges for inland telegrams. This was also the view in another place of the Select Committee on Estimates. Loss on inland telegrams is of very long standing, but it has been rising since the war, and on average the revenue on an inland telegram is now a little over 2s., against a cost of 5s., of which nearly 3s. 6d. represents staff costs.
The Post Office has taken every possible step to reduce this loss. Integration of telegraph and telephone service is sometimes suggested as the remedy, but mere amalgamation of the accounts would at best only hide a telegraph subsidy, if not from one source, then from another. Physical integration of plant, on the other hand, has already gone a long way. All telegraph lines are provided by the telephone network, and it is now possible, by improved techniques, to send twenty-four telegrams simultaneously over one telephone circuit. Transmission by teleprinter is the most economical way of sending telegrams over longer distances, but where it is cheaper, telegrams are telephoned. Facsimile equipment, working over telephone lines, is being tried; and the use of telephone plant for through-switching has enabled us to save £500,000 a year by reducing operating staff. Engineering plant costs are, in total, less than 6d. a telegram. With the co-operation of the staff, which I cannot commend too highly (to be a member of a steadily contracting service can be very disheartening), staff costs also have been reduced; staff numbers have fallen steadily in line with the fall in traffic.
Unhappily, all our efforts at economy have been defeated by the general rise in costs, and the deficit is now over £4½ million. After careful consideration, the Government have decided that it would not be fair to the users of other Post Office services to continue to subsidise the telegraphs to this extent, and that the only course is to ask the telegraph user to contribute more towards the cost of the service. It is therefore proposed to introduce legislation to provide for the following increased charges. The charge for an ordinary inland telegram will be increased. 55 from 1s. 6d. for twelve words, and 1½d. a word thereafter, to 3s. for twelve words, and 3d. a word thereafter. The Greetings telegram will be continued at the new tariff, but the supplementary charge will remain at 6d. For Press telegrams the present charge of 1s. 3d. for each page of sixty words (which was not increased when the ordinary inland telegram went up in 1943 and 1951) will be raised to 3s.—that is, the same as the charge for an ordinary telegram. Copies of Press telegrams will be charged 1s.—as proposed for ordinary telegrams—and restricted, as for ordinary telegrams, to delivery within the same area as the original.
Nearly half the ordinary inland telegraph traffic consists of business messages. Of the rest, about two-fifths are Greetings telegrams. Other social and domestic messages amount to about 12 million a year, or rather less than one per family. The present average yearly expenditure of a family on telegrams is about 2s. 9d. a year, while life and death messages, and bad news, total less than one million a year, or less than one per family every twelve years. But although domestic expenditure on telegrams may be small, there must be some means of sending urgent messages cheaply. I propose, therefore, to introduce an overnight service, under which telegrams other than Greetings telegrams will be accepted at any time up to 10 p.m. for delivery early next morning, normally by first post, at the present standard charge of 1s. 6d. for twelve words, and 1½d. for each additional word. I hope that this night service will help private senders, especially in country areas, who have occasion to send urgent messages on domestic affairs.
It is estimated that when these charges are fully effective they will reduce the deficit on inland telegrams to about £2 million a year. The improvement will consist in roughly equal proportions of reduced costs, which will take a little time to mature, and increased revenue. Even so the inland telegram will be subsidised by users of other Post Office services to the extent of about a quarter of its cost.
§ THE EARL OF LUCANMy Lords, while thanking the noble Earl for his full statement, I should like to ask him one or two supplementary questions. We 56 appreciate that he has shown some consideration for the ordinary user in providing an over-night service at existing rates—that certainly meets the need for an urgent means of communication at cheap rates. But the general effect on the telegraph-using public is serious, and I would ask the noble Earl whether he is satisfied that he is treating the ordinary user with fairness in relation to other users of the telegraph service. Does he realise that the rate for ordinary telegrams has gone up 300 per cent. since before the war, whereas the Press rate, which he has just announced, will be a rise of only 100 per cent.? I suggest to him that the ordinary public has some grievance on that account.
§ 2.50 p.m.
§ THE EARL OF LISTOWELMy Lords, I should like to associate myself with my noble friend Lord Lucan in thanking the noble Earl opposite for making this important statement of policy at this time and before the Bill, and to add that I am sure we all commiserate with him in having to dip so deeply into our pockets twice in the same week. May I add to what noble Lords on this side of the House may wish to say at this stage that we agree with the noble Earl opposite that some increase in the charge for inland telegrams is necessary, having regard to the increasing deficit of the service, but we take the view that the amount of the increase is unfair and excessive in relation to the telegraph-using public, and likely to be detrimental to the efficiency of the telegraph service. May I ask the noble Earl whether he still has an open mind in regard to matters of detail—matters of less than principle such as those mentioned by my noble friend—and whether he will be willing to give serious thought to alternative suggestions which we shall wish to make when the Bill comes before this House?
§ LORD AMMONMy Lords, may I ask the noble Earl whether the position which he has put is any different in principle from that which has existed in the past? Is it not a fact that the telegraph service has never paid, that it has always shown a deficit, but that it has been regarded as a public service and the deficit carried on the general revenue of the Post Office? I suggest that that is a point which ought still to be considered.
§ EARL DE LA WARRI find the question put by the noble Earl, Lord Lucan, a little difficult to answer. Actually there were a great number of questions. What the noble Earl said did not quite amount to a speech, but he certainly put many questions. I think that what he mainly asked was whether what is proposed is fair to the ordinary user. That is much the same question as was put by the noble Earl, Lord Listowel. He said, I think, that he agreed that at least some rise was necessary, but he asked whether this increase was not too great. I do not mind saying that for a long time I have tried very hard —no Minister likes to put up charges to this extent—to see whether we could not meet the situation by charging half-a-crown for an inland, telegram. The figures show that the present loss, which I said was some £4½ million, is actually £4,600,000. If I increased the rate to only half a crown that would give us only an extra £1 million revenue, so that the loss would be about £3½million.
What was particularly worrying about the situation was not merely the size of the loss but the fact that year by year it is steadily increasing. It would have been possible for the Government to take the line of saying, "We will try half a crown now and leave it to our successors in a year or so"—and it would not have been more than a year or so —"to go up to a further amount." But it seemed to me that it was the honest policy for us to face the situation in its stark reality and do what was really necessary. I agree with the noble Lord, Lord Ammon. He asked whether it is not a fact that since 1870 the telegraph service has always been run as a public service at a loss. That is true. It is a matter of degree. Noble Lords will realise that it is a matter of deliberate policy, and the Government have decided to work the Post Office on a small surplus because they believe that the Post Office should not be used for purposes of taxation. But if there is an extremely small surplus one has no margin for carrying these ever-increasing costs. I would remind Lord Ammon that, in spite of this increase, there is still a subsidy to the inland telegraph service from users of the other postal and telephone services, and there will still be a deficit of no less than £2 million.
LORD ROCHDALEMay I ask the noble Earl two specific supplementary questions. First, has this matter been referred to the Post Office Advisory Council? Secondly, can something be done to assist a member of the public who wishes to send a telegram after the local post office is shut, he not being on the telephone? He is going to be in somewhat of a difficulty in using a public telephone call box, because a great many more coins of the right kind will be necessary to pay for the call. Can the noble Earl say whether there is any other way in which a member of the public, under those conditions, can send a telegram?
§ EARL DE LA WARRIn reply to the noble Lord's first question, I can tell him that the Post Office Advisory Council have considered this problem of inland telegraph finances at a number of meetings from 1949 onwards, and they agree that there is no alternative to a steep increase in tariffs of the kind now proposed. On the second point, I would say that of course telegrams can always be dictated over telephones, including the 60,000 instruments in call boxes which are available throughout the country at all hours. I do not see how a telegram can be paid for except by the insertion of money in the coin box at the call boxes. I wish I could think of another way in which it could be done, but I think that is the only way.
§ LORD LAWSONMay I ask the noble Lord whether:the Government have considered the possibility of this increase in charges resulting in a reduction in the number of telegrams sent, so that in the long run there will probably be a reduction of income and the last state may be worse than the first.
§ EARL DE LA WARRWe have made careful calculations on that point. When dealing with matters like this, questions regarding the future have, of course, to be answered by means of estimates. In view of its past record—and I think the noble Earl Lord Listowel will confirm this—it may be said that the Post Office has proved to be capable of making very accurate prognostications. But I confess this is an estimate.
§ LORD LAWSONI take it that what the noble Earl really means is that this is just a long shot.
§ EARL DE LA WARRIt is the result of taking a very careful survey, in which there have been taken into consideration such matters as the nature of the telegrams sent, the reasons for which they have been sent, and past experience in relation to alteration of charges
§ THE EARL OF LISTOWELIt would be interesting to the House if the noble Earl could give us an estimate of the reduction in the volume of traffic which it is thought may result from the increased charges which he is proposing. He may not wish to give that estimate to your Lordships now, but if he were able to do so I think it would be of interest.
§ EARL DE LA WARRWe have made our estimates, but I am not sure that it would be altogether fair to those concerned to give estimates now; but I will gladly communicate with the noble Earl.
VISCOUNT ALEXANDER OF HILLS-BOROUGHI understand that this matter will be the subject of a Bill. If so, we can raise further matters of detail when the Bill is before us.
§ LORD AMMONIs it not a fact that this policy has proved a failure in the past, because each time there has been an increase in charges the deficit has grown? That is what will happen on this occasion.
LORD TEYNHAMAs a member of the Post Office Advisory Council I can assure noble Lords opposite that we have gone into this matter extremely carefully, and we feel that there is no option but to raise the charges as proposed.