§ 5.16 p.m.
§ Order of the Day for the Second Reading read.
§ THE POSTMASTER GENERAL (EARL DE LA WARR)
My Lords, I beg to move that this Bill be read a second time—I might, perhaps, say that I most regretfully beg to move that it be read a second time. It was on March 3 that I explained to your Lordships the reason why telegraph charges must be raised. Quite briefly, it is that the loss on telegrams has been going on for many years. Actually, they have always lost money since 1870, when they were taken over, but I am afraid that the loss has been steadily growing. It has been growing since the war, and has now reached over £4½ million a year. That figure, of course, refers to the inland telegram account; and it is still tending to increase. Perhaps the most graphic way of putting it is that the ordinary inland telegram costs about 5s. and brings in about 2s. That is obviously an impossible position to allow to continue. We have naturally made every possible economy by technical improvements, which, incidentally, are not only bringing about economy but are actually speeding up the service. We have been able to save something like £500,000 a year. I have said that we have to choose between having a 3s. subsidy for every telegram or putting up the charge very steeply. I have most reluctantly chosen the second course, because it is obviously not right that the users of the other Post Office services should have to find more than half the cost of every telegram.
Noble Lords may well think that a 100 per cent. increase is going too far, and I freely admit that when I first considered the matter I myself took that view most strongly. Naturally, we should all have preferred, if it had to be raised at all, a rise to only half a crown. But this would not have been facing the problem. It would have saved only a little more than £1½ million a year, leaving us with a total loss of £3 million. As it is, in spite of this drastic increase, we shall still be subsidising telegrams to the extent of, I am afraid, 1s. 6d. and there will remain an annual loss of £2 million. When we take all these figures globally, they sound very serious; but there is some small comfort, I think, in the fact that when 408 we analyse the senders of telegrams we find that the number of what we might call "private affairs" telegrams is a good deal smaller than people might imagine.
There are, I believe, about 14 million families in this country, and the number of these "private affairs" telegrams sent annually is approximately 12 million. That is somewhat under one telegram per family. Of course, we know that things do not work out quite as tidily as that, but in fact there are very few families who will really be affected to the extent of more than a few shillings a year. Even so, it seemed to me that it was only right to try to help particularly the private user of the telegraph service by having at least some service that remained at the present rates. Therefore, we have designed the new overnight service. That means that a telegram can be handed in before 10 p.m. to be delivered early the next morning—that will be normally by the first post. That service will be at the present charge of 1s. 6d. for twelve words. The telegram can be handed over the post office counter but, as the post offices will be closing in the evening, it can also be despatched by telephone. Here, I would remind the public that they can use the telephone kiosks for the sending of telegrams. I hope that this will be of some small assistance, particularly in the country districts.
We have to face the fact that for many years this has been a contracting service. It is sandwiched between a rapidly expanding telephone service and a quick postal service. In spite of the length of the waiting list to-day, it is a fact that we are now putting new subscribers on to the telephone at one and a half times the rate at which they were being connected before the war. Except for the war years, telegram traffic has fallen steadily since 1920. For instance, since 1946 it has fallen from 52 million telegrams a year to 34 million telegrams a year—that is, counting business telegrams and telegrams of other types. Usually in business a good turnover means good profits. Your Lordship might think that this fall in turnover would make the loss greater. Many people have said that we could solve this situation by decreasing charges and increasing our turnover, and that then all would be well. In fact, that is not so. In 1935, we tried reducing charges. The 409 traffic did go up by 30 per cent., but the loss increased by 50 per cent. It may be said: If this is such a contracting service, why not face the situation and do away with it altogether? I think that would be a most mistaken policy. The telegram still has a big part to play in our system of communications. It may be—indeed I am quite sure that it is—that the telegraph system will, in time, become more and more integrated into the telephone service. That will happen possibly more rapidly than some people think, but for the moment the telegram has its purpose. It is still useful, and it would be wrong for the Government now to consider closing it down or substantially curtailing it. Of course, we might, in order to make economies, have adopted the policy of allowing the service to deteriorate greatly. We could have saved considerably by delaying on delivery, because, as your Lordships probably know, it is the cost of delivery that is such a heavy burden. But then I think we should have been destroying the main purpose of the telegraph system, which is speed.
I should close by giving your Lordships an assurance that we shall go on doing our best to give the sort of service which the public needs while maintaining our search for new ways of reducing the costs without allowing the service to deteriorate. I would say one last word to our staff. Naturally, they are much concerned about what must be a cut in the service. It is of the greatest concern to the older members of our staff, particularly of our supervising staff. This is not the moment for making any detailed promises, but I should like to tell them, through your Lordships, that I am considering their position very carefully at the moment and am engaged in discussions with their staff associations on this matter that affects them so deeply. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Earl De La Warr.)
§ 5.28 p.m.
§ THE EARL OF LUCAN
My Lords, everyone will sympathise with the noble Earl who has found himself, as other Postmasters General have before, in an extremely difficult position, with falling inland telegraph traffic and revenue and rising costs—costs which have been rising 410 for many years but more steeply since the last war. The noble Earl said that some people might urge that the whole telegraph service be abandoned or be allowed to die. I cannot believe that anyone who knows anything of the service would seriously suggest that. It is surely, beyond question, one of the vital services, not only in case of war for defence purposes but in case of civil emergency of any kind. I believe that in the floods last year without the telegraph service there would have been much greater difficulty in coping with the emergency.
The noble Earl told us, when he made his first announcement on March 3, that the Government had decided to work the Post Office on a small surplus and not to use it as a tax-collecting agency. We are glad to hear that, but I would question the wisdom of the very steep increase imposed by the present Bill on the inland telegraph charges. There is no matter of principle involved to-day. It is known that the inland telegraphs have always needed a subsidy. Even after this Bill is passed, they will still be receiving a subsidy. To say that other Post Office agencies would have to carry that is surely not correct, because there is the Post Office general surplus. If it is accepted that the Post Office general surplus can operate at a lower figure than was thought desirable in the past, where are we to fix the charges? How small should the surplus be allowed to be, and how big should be the subsidy on inland telegrams?
The figures that were given before the Select Committee on Estimates in another place showed, incidentally, that the Post Office had gone most carefully into every possible measure to reduce this deficit, and among other things they calculated the result of a 2s. 6d. telegram instead of a 3s. telegram. The effect of that, with a deferred service similar to the one in this Bill, would reduce the estimated deficit from £4.6 million to £3.3 million. In fact, the present Bill is designed to bring the deficit down to £2.5 million. So the difference is about £1 million. How big is the Post Office surplus? In another place, the Assistant Postmaster General said that the Post Office were budgeting this year for a £2.9 million surplus, before this Bill is taken into account. I put it to the noble Earl that the effect of the present Bill 411 will be to raise his surplus to nearly £5 million, and the effect of the 2s. 6d. telegram would be to raise his surplus to nearly £4 million. If the Post Office are content to work to a lower surplus, could they not accept a surplus of £4 million, instead of £5 million?
Apart from the question of hardship on individuals—and I agree with the noble Earl that probably, in the aggregate, each family does not spend a great deal in the year on telegrams—this Bill will not make a great deal of difference, but it will, according to Post Office estimates, result in a 30 per cent. reduction of traffic and corresponding reductions in the service as a whole and in the staff. If this is a vital national service, it should not be allowed to shrink to a point where it is incapable of carrying out its function in case of emergency. Surely that means that there must always be a sufficiency of staff to afford proper prospects for a career. If it is run down to such an extent that there is no recruitment for many years, and it remains at a very low level, there will not be opportunities for a career in that service. Although the noble Earl has said (and we welcome his assurance) that he has the interest of the staff very much in mind, I suggest that the danger in a reduction of 30 per cent. in traffic is, that the service will become ineffectual and incapable of carrying out the functions for which we look to it. On those grounds, noble Lords on this side of the House are not fully convinced that the 3s. charge for a telegram is essential.
Then there is the question of the Press. The question of subsidies to Press telegrams is one of long standing, and I would not attempt to argue the desirability or otherwise of such a big and long-established principle. But we know from the published documents that the Press are making less and less use of the ordinary inland telegram service; we know that they are taking more and more to modern methods of communication, and it seems to me that the days when it was necessary heavily to subsidise Press messages, in order to encourage in every way the dissemination of news, are rather of the past. I suggest that it would be long before it is generally accepted that such a subsidy is really justified. I notice from the figures given by the Post Office 412 that the stated deficit on the workings of the Press telegrams is given with considerable qualification—in other words, there is no method of finding out accurately the loss on Press telegrams. At one time the figure of £250,000 was stated, and then I think £150,000; finally, I think the loss was given as £60,000. I suggest that this is entirely a notional figure, but so long as there is any deficit on that particular branch of the service, I think the ordinary user is justified in looking askance at the low Press rates, which, although they have risen, and by this Bill will rise equally with those of the ordinary user, still have a preference of five words to one in favour of the Press—and we have not heard that any of the Press are in great financial straits.
Finally, my Lords, we should like an assurance from the Government that this is going to be their last demand on our pockets. The noble Earl, by this Bill, wishes to reduce the deficit from £4½ million to £2½ million. We should like him to say that he does not propose to reduce it any lower. He, or a successor of his, might come along and say that a deficit of £2½ million on inland telegrams is quite intolerable, and that we must have another Bill in order to raise the charges again. As I have said before, I am sure that that would put an end to the telegraph service as an effective service. I think we ought to know that this will be the noble Earl's last demand on our pockets. Apart from that we have no objections to offer to the Second Reading of this Bill.
§ 5.39 p.m.
§ EARL DE LA WARR
My Lords, I thank the noble Earl, Lord Lucan, for his very moderate remarks. He asked me some definite questions, the first of which was: Are we not in danger of so reducing this service that it will not be effectual to deal with all the permanent or long term demands that are likely to be made on the service, particularly in times of emergency? I realise the force of that point. It is one that we have gone into extremely carefully, and I am quite satisfied that the answer must be, No. Then he asked me about the position as regards loss on Press telegrams. First of all the noble Earl is quite right in saying that all these calculations are extremely notional. In a concern like ours, with its vast turnover, a great 413 deal depends upon where you put your overheads before you get your costs. There are so many different ways of doing this sum that it is quite easy to produce very varying answers. I think the noble Earl is right: the figures could fairly be said to be round about £60,000 loss. Under this scheme we have, in terms of the changed situation, hit the Press fairly hard. The rate they used to pay was 1s. 3d. a page of 60 or 80 words. They will now pay 3s. a page. They had the privilege of putting multiple addresses down at the rate of 3d. a page, anywhere. It has now become 1s., subject to considerable limiting conditions.
I must say that I agree with a great deal the noble Earl said about the question of principle and whether it is necessary to give this preferential rate to the Press. The fact remains that it is a long-standing arrangement and is tied up with the whole history of the telegraphs. I do not think there is any country in the world which does not give some preference to the Press. The noble Earl is quite right in saying that what we think of as the national Press does not need this privilege at all: in fact, they make extremely little use of it. They may be said to be using it less and less. They use the telephones and they have their own private wires. I confess that what influenced me in favour of continuing the very small privilege which is left is the effect on small, independent journalists. Such men have no private wires and have to send messages much longer than those which are normally sent by the ordinary citizen. So it seemed reasonable to leave this small concession.
Now I come to the difficult point about the Post Office surplus, which is to-day somewhere round about £4 million. I prefer to use the word "margin" rather than "surplus." In the old days, when it was round about £11 million, it was clearly a surplus, and a considerable contribution to the Exchequer. To-day it is likely to be in the region of £4 million. As your Lordships know, the pound to-day is worth a good deal less than it was in the past when our surplus was £11 million.
§ THE EARL OF LUCAN
Will the noble Earl tell us what the position will be when this Bill has came into force?
§ EARL DE LA WARR
I was coming to that point. The Assistant Postmaster General gave a figure of £4.9 million. To illustrate the point I am making I can say that it has been reduced even during this last month by something like £1 million. I was going to use that fact in justification. Other concerns with a turnover of this enormous nature would consider this margin of about £4 million a bare legitimate margin. Even one general wage increase of the type that has taken place twice during the last two years would, in fact, do a great deal more than leave us in the red. The noble Earl concluded by asking whether I could give an assurance that I will never come back to the House for another increase. I ask the noble Earl whether he can persuade his friends in the trade unions to stop their annual requests for more and more money. Someone has to meet these charges, and so long as staff salaries go up—something like 70 per cent. of the cost of telegrams goes in staff costs—I can give no guarantee that either this or any other service will not require an increase. I can, however, say that on anything like the present figures I certainly regard this as—or perhaps I should say I hope it will be—the final telegraph increase in my Postmaster-Generalship.
§ THE EARL OF LUCAN
Before the noble Earl sits down, may I point out that I asked whether he would undertake not to try to reduce the deficit below its present figure or to abolish it altogether.
§ EARL DE LA WARR
That was not actually what the noble Earl said, but I will answer the question. I will say that, on the basis of things remaining as they are, I would give an undertaking; but with costs rising as they are, and so rapidly, I really cannot look ahead and give an assurance of a definite character.
§ On Question, Bill read 2a; and committed to a Committee of the Whole House.
§ House adjourned at a quarter before six o'clock.