§ 3.17 p.m.
§ Order of the Day for the Second Reading read.
§ LORD CHESHAMMy Lords, this Bill, which is a certified Money Bill, has the intention of providing funds for Post Office capital expenditure, and is of a kind which normally comes before your Lordships at approximately two-yearly intervals. The difference which will strike your Lordships at once is that this time only £75 million is asked for, in contrast to £175 million for which we asked last time. This, I must say straight away, does not mean that the capital provided for the Post Office has been drastically cut, but reflects a most valuable and important change in the Post Office financial arrangements.
From April 1, 1958, the whole of the depreciation provision—which since April 1, 1956, has been based on current values—is to be ploughed back into the organisation and will be available for further capital expenditure, either for renewals or by way of development. In practice, this means that, of a total of £180 million which the Post Office expects to spend in two years, no less than £105 million will be made available by way of depreciation. In other words, nearly three-fifths of its requirements will be found from internal sources, and only the balance of £75 million—which is the amount for which we are asking in this Bill—will be borrowed from the Treasury. In passing, I think it might interest your Lordships to know that the form of the commercial accounts has been greatly simplified, and in this connection my right honourable friend the Postmaster-General has consulted, and has received valuable advice from, a firm of chartered accountants; and your Lordships will find copies of the commercial accounts and of the accountants' report, in the Printed Paper Office.
The details of the Bill itself consist largely of rather complex technicalities. Clause 1, subsection (1), determines the maximum of £75 million which may be issued. Subsections (2) to (5) of Clause 1 are technical provisions covering the manner in which the Treasury may obtain money to issue to the Post Office and the method by which issues are amortised through Parliamentary Votes. Clause 2, 712 subsections (1) to (3) are transitional accounting arrangements covering the changes from the old system of financing to the new.
My Lords, that is almost all there is to say on the Bill, but I think perhaps your Lordships will expect a report, even if a brief one, on progress in Post Office affairs since the last Money Act. On November 13 last year I announced to your Lordships the introduction of group charging as a prelude to full automation of the telephone system, and I explained that this would be accompanied by reductions in the cost of many telephone calls. The new system of charging was introduced on January 1, this year, without a hitch I am glad to say, and continues to work smoothly. In view of the size of the operation, this reflects great credit on the staff throughout the country. Traffic generally has increased by about 10 per cent. on the routes where charges have been reduced to 3d.; on some rural routes the increases have been of the order of 20 to 30 per cent. Additional circuits have been provided on routes on which large increases of traffic were foreseen, and only one or two instances of traffic congestion have been reported. As a result of the progress made on extended dialling, and the use made by subscribers of this facility, it is now estimated that a staff reduction of 1,150 will be possible by the end of March.
Having said that, I know that many of your Lordships, in all parts of the House, will be concerned about the question of alternative employment. In this connection, I must first say that there is a fairly high wastage rate among this staff, due to resignations for marriage and other reasons, and it is anticipated that this will itself go far to meet the figure I have just mentioned. There will inevitably be some redundancy in some places from time to time, as the programme is progressively extended, but it certainly is not considered to be a worry at the present time. As your Lordships know, the Post Office attaches the greatest importance to close consultation with the recognised staff representatives, and this consultation has been carried out in all stages of this operation and is continuing. A special sub-committee of the Departmental Whitley Council has been set up, and I think I am right in saying that there is every prospect that an agreed scheme will be 713 worked out for making full use of the services of the staff released for other jobs by this forerunner, perhaps we may call it, of automation.
If I may turn to the field of overseas communication, the outstanding development has been the laying of the first transatlantic telephone cable which was brought into service in September, 1956. Until that time our telephone communication with the United States and Canada had been entirely dependent on radio. The improved quality and reliability of service that the cable provides have given a great impetus to the use of the transatlantic telephone. Traffic has grown much faster than was forecast. In the service with the United States it has doubled, and with Canada it has trebled since the cable came into use. In fact the cable itself, which is by way of being a £15 million investment and which had been expected to pay its way only by 1962, is already operating at a profit.
We are continuing our close co-operation with the U.S.A. to devise technical methods to make even better use of this transatlantic cable. Our experts have been consulting about this matter in the last few days, and I think I am right in saying that they are consulting about it at this very moment. As a point of interest, the success of this cable means a good deal to other European countries too; as has been recently announced, a new cable from the U.S.A. to France has been planned for 1959, the interesting part being that it is to be laid by us. So far as we concerned, we have pursued further researches, with the result that an all-British system has been planned in conjunction with Canada, and a new cable, which will be owned jointly by Cable and Wireless, Limited, and the Canadian Overseas Telecommunication Corporation, should be laid in 1961. This cable should provide more channels for conversations at less cost than the present cable, and I think it will be a notable Commonwealth project to improve Commonwealth communications.
So far, my Lords, I have spoken only of telephone mechanisation and automation. But, of course, the postal side is not being overlooked. I know that it is the earnest desire of all concerned to advance mechanisation of the posts. But this is a much more difficult task. Some 27 million letters have to be collected 714 and delivered every day, and a large amount of personal service by postmen is therefore essential. However, the Post Office has developed a series of machines which are designed to handle letters automatically from the moment they are brought into the sorting office to the point at which they are ready for sorting; and field trials are already in progress. Another machine has been developed which will allow a sorter to sort letters more quickly, and into 144 destinations, instead of the 48 which he can at present manage by hand. Twenty of these machines have been ordered for field trials beginning this year.
Work at Post Office counters is so varied that obviously the scope for mechanisation is limited. All the same, counter and self-service machines to speed the sale of stamps (that is either for the clerk or the public), machines to issue labels for parcels instead of stamps, machines to issue postal orders and to sell stamped letter cards and envelopes are all being rapidly developed and should in due course ease the load on the counter staff and give a better service to the public. We are pushing ahead also with mechanising the clerical work which goes with such a large number of the Post Office activities. For instance, computer equipment worth £250,000 has been ordered for a mechanised pay roll scheme for the 112,000 Post Office employees in the London area. Electronic equipment of this type, supplemented by punched card installations and office machinery of more conventional type, is all being brought into use on a growing scale, and I think that these developments, too, should add to progressive efficiency.
My Lords, I have mentioned the point already, but I would repeat that in all these developments the interests of the staff have been, and continue to be, very much in mind. As with the telephones, so with the posts, the Post Office has set up special machinery to ensure the closest contact with the staff in order that the mechanisation may proceed as swiftly and smoothly as possible from every point of view. Your Lordships will, therefore, I think, share my conviction that the Post Office, the oldest nationalised industry, is in fact a highly progressive institution. It has a great many notable technical achievements to its credit during the past few years, 715 although it must be admitted that there are a great many problems yet to be solved.
In conclusion, I would fully support my right honourable friend the Postmaster-General when he said that the Post Office wanted to give a personal service which is courteous and efficient, and at the same time to press on with mechanisation to keep down costs. We can, I think, be sure that very good value will be obtained from the money to be provided under this Bill, and I therefore commend it to your Lordships for a Second Reading. I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Chesham.)
§ 3.31 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, I was hoping, before any other debate, to have "popped in" in time to put a question to the noble Lord, because I have been looking at what the Postmaster-General said in another place about this matter with which the noble Lord opened—that is, the question of the £180 million expenditure, of which £105 million is to be found from the Post Office's own resources. The noble Lord afterwards referred to this amount as being made available by way of depreciation. Apparently, what is being taken off in depreciation is to be spent by way of cash in developments in the total sum of £180 million. The noble Lord says that the Post Office is finding this £105 million from its own resources. That seems to me to be a rather difficult statement of accountancy, and I should like to know whether in fact, at the end of the transaction, the permanent assets of the Post Office will have been properly depreciated.
§ 3.32 p.m.
§ THE EARL OF LUCANMy Lords, your Lordships will have been grateful to the noble Lord for the most comprehensive report he has given us on the work of the Post Office. Of course, this Bill deals with finance, and it is not for us in this House to deal in detail with that. The methods of financing which the noble Lord outlined have some novel features, and my noble Leader would like some further elucidation on that point. I noticed from the accounts 716 for 1956–57 that these are the first annual commercial accounts which embody the new scheme whereby the Post Office pays to the Exchequer an annual contribution of £5 million, instead of the old system under which the Exchequer, I think, took the lot. I think one can congratulate the Chancellor of the Exchequer of the day on doing a thoroughly good deal and having a good business sense, because it appears that, after some thirty-five years of Post Office surpluses, he chose the moment when those surpluses were going to be turned into a deficit, and insured himself by settling for a £5 million contribution, which of course this year has turned what would have been a small surplus into a deficit of £3 million on the Post Office Accounts. However, that is the new system under which the Post Office is working and is prepared to work. We must see how it goes, and we must hope that the Post Office will not lack capital to invest in its service.
I think your Lordships will agree that there is still need for a great deal of capital investment in the service. There is still a waiting list of would-be telephone subscribers. I believe there are still exchanges that are overloaded. The only matter upon which we can all congratulate the Post Office is that it has reduced the charges for telephone calls. Admittedly, the rental is still very high, but the reduction in the price of calls that has recently come into force is the solitary check to the tide of inflation that we have known for many years past. Obviously, the new charging system for calls will result in a greatly increased use of the telephone and, we hope too, increased revenue to the Post Office. Automation of the telephone service is one more piece of evidence that the Post Office research and engineering departments have produced wonderful results, and the Post Office can be congratulated on the work of the staff in those departments. The noble Lord, I think, did not mention the telegraph service. We all know that that is a public service which is running at a loss, not only in this country but I believe in every other country. That is a loss that we must face and one which must be carried by the other services.
Turning to the postal services, I would say that the story the noble Lord had to tell about proposed mechanisation was 717 most impressive. But I wonder whether the department which involves most expense and the greatest manpower is not that which concerns the delivery of letters rather than the sorting of letters, and I wonder what success the Postmaster-General has had in trying to improve the facilities that householders provide for the delivery of their letters. Some letterboxes are down at the bottom of the door, some have very heavy springs, some are the wrong size. This adds enormously to the burden of the postman who has to deliver letters. It adds to the time it takes. I believe that the Postmaster-General has commenced a campaign to try to persuade architects and builders to design doors with letter-boxes which are more convenient for the delivery of letters. That is a direction in which there is a great deal of scope for saving labour and easing the task of the postman.
The noble Lord said that his right honourable friend realises that the postal services involve a personal service to every member of the population, and that he is very conscious of it. I think that in any form of service of that kind there is a conflict between the convenience of the public and the economy and efficiency of the service. Obviously, if you reduce the number of post offices you reduce the overheads, but it would be to the inconvenience of the public. This is particularly the case with the vast majority of post offices in this country which, as is not, generally known, are sub-post offices which are staffed by part-time staff—the sub-postmasters and sub-postmistresses. Speaking from memory, I believe that the figure is something like 30,000 sub-post offices to about 2,000 Crown offices.
I should like to put to the noble Lord one particular case in which there is considerable local concern at the reported intention of the Post Office to close a sub-post office: this is in St. John's Wood, where there is a small sub-post office in Queen's Terrace. The Crown post office which is not very far away has recently been moved, its new position being at the most 200 yards nearer to the sub-post office. That is causing great concern to people in the immediate neighbour-hood of the sub-post office, those elderly and sick people who for years have been able to go round the corner, 200 yards or so, to draw their pension or to do 718 their postal business and who will now have to walk the better part of half a mile to the main Crown office, if the other is closed. I should like the noble Lord to look at this matter and see whether such a decision has in fact been reached, and if it has, whether it could not be reconsidered, because I am sure that there real hardship will be caused to a small number of people by this closure.
There are two other matters which I should mention. The great story of the transatlantic cable is one of the success stories of the Post Office and it should remind us of that very fine branch of the service and those who man the telegraph ships, without whom cable laying would be impossible. H.M.S. "Monarch" is a very up to date and fine ship. The work she is doing is beyond praise and has resulted in this great advance in Transatlantic communications. Lastly, we can be grateful to the noble Lord for what he said about industrial relations. From what we hear, relations between the Postmaster-General and the unions and staff associations concerned are good. We know that the question of automation and reduction of staff was discussed with the unions and agreement reached before any decisions were made. Surely that sets an example to the whole of industry. I believe that the Post Office as a whole sets an example to industry—the example, let us not forget, of a nationalised organisation.
§ 3.44 p.m.
§ LORD CHESHAMMy Lords, with the noble Viscount's permission. I should like to deal with the question he raised in the last of the few points I have to make, and I would begin by expressing my appreciation to him and the noble Earl who has just sat clown for the kind things they have said and particularly for their tribute to the staff. Those words will be appreciated very widely and far afield outside this Chamber, and it is a great pleasure to me to hear them said, because in my little way I have noticed particularly that in the Post Office, among staff of all grades, there is, as the noble Earl knows well, a spirit which considerably transcends the normal demands of duty. I know that those words will be appreciated and are well earned.
719 The noble Earl mentioned the telephone waiting list. I do not wish to speak for long on that subject, but your Lordships might be interested to know the latest figure, which is a little over 180,000. That compares with a figure of about 360,000 on the waiting list two years ago. Your Lordships might also like to know that in the last two years 750.000 new subscribers' lines were connected. The telegraph service always presents a slightly vexed question, and on that I would say that my right honourable friend has set up an independent committee to advise him on the place which the telegraph system should take in the national system of communications. He is awaiting the report of that committee; so at the moment I can say no more upon that matter. I agree, as everyone must, with what the noble Earl said about the means of getting letters into letter-boxes. A British standard has now been drawn up for letter-boxes and has been published. The Ministry of Housing, the Builders' Federation and the Royal Institute of Architects have all been asked to co-operate in specifying for all new buildings fittings which reach this standard and it is hoped that rapid progress can thus be made to meet the point mentioned by the noble Earl.
With regard to sub-post offices and, in particular, that at Queen's Terrace, St. John's Wood, I believe I am right in saying that that sub-post office is in fact now closed. May I add a word on the background? I should not like it to be thought that that was due to some arbitrary decision on the part of my right honourable friend or was done on grounds of economy. The matter was carefully considered and was put before the Post Office advisory committee for the area, who are, of course, independent people. Incidentally, the chairman of that committee is a representative of the old age pensioners. It was not felt that they could find sufficient grounds to oppose the decision.
§ THE EARL OF LUCANMy Lords, may I ask which area?
§ LORD CHESHAMI am speaking of the area in which the post office is situated—St. John's Wood. I can say that such decisions are not made arbitrarily. They are made only after full and due 720 consideration, which naturally includes both the efficiency of the Post Office and the convenience of the public. May I now return to the question of money? The noble Viscount asked me about this depreciation provision, and I must admit that it is a little hard to follow, in view of the form of the accounts in the past. The situation following the change is this: in the past the Post Office has, in its commercial accounts, distinguished between the capital cost of developing its systems and the capital cost of renewing old equipment. All the money needed for capital development has been borrowed under Money Acts such as this Bill, and the depreciation provision has been used to finance the renewals.
The equipment now being renewed was installed years ago when the systems were much smaller, and the depreciation provisions are related to the much larger systems which we have to-day. Consequently, the depreciation is much more than is needed to pay for renewals and there is a balance, which previously has remained on deposit with the Exchequer, earning interest, and has not been put to direct use by the Post Office. In future that distinction will be abolished—that is, the distinction between the cost of development and the cost of renewals—and having thus created a single category of capital expenditure, the whole of the depreciation provision will be used plus the balance which it is anticipated will be needed and which will be borrowed by means of a Bill such as this.
§ VISCOUNT ALEXANDER of HILLSBOROUGHMy Lords, I shall look carefully at what has been said to-morrow morning. Falling on my ear, it is not quite so clear as it ought to be. In the case of the depreciation account of big concerns, although it may not be published, there is a detailed schedule of the original cost; then deductions for any sales of the capital assets; and the final net value only is taken into account before you declare a surplus for the year. That is what I really want to get at. I am getting rather mixed up regarding the cash that is spoken of as coming from depreciation. You are going to find the new capital to a large extent out of sources which you are supposed to have used for depreciation. I think it is essential that we should obtain a clear picture.
§ LORD CHESHAMMy Lords, as your Lordships will readily appreciate, I am no accounting wizard, but I would say this. The matter is concerned largely with an operation of simplification, as it were. The Post Office charges provide sufficient money to cover depreciation, which is the money which is to be used for this expenditure; and the assets, I can assure the noble Viscount, will have been properly depreciated. I can quite see how difficult it is to understand—I find it rather difficult myself—but, if I may oversimplify the case, I would say that the previous form of the accounts has really consisted of having a surplus of money deriving from depreciation which went to the Exchequer, where it remained, sitting there earning interest and doing nothing else; and the Post Office had to borrow a much larger sum back because of that, It is a question of simplification and greater efficiency.
§ LORD SOMERSMy Lords, I apologise for speaking after the noble Lord has made his final speech, but I should be most grateful if he would give a little assurance on one point. After listening to the details of the increased mechanisation and, apparently, the happy financial position of the Post Office, I wonder whether he could tell me that one point will not be overlooked, and that is the condition of the vans used by country postmen. I live in a wild part of the country, and postmen who come to me have to drive through very difficult conditions during the winter. Their vans are not provided with de-misters or defrosters; they have no heaters; they are not provided with chains, they have no fog lamp and they have to meet all sorts of conditions, in the minor roads of course, such as those of snow, fog, ice and anything else that comes. Very often, as a result, the post is not absolutely and completely stopped but is very much delayed.
I understood (what accuracy there is in the statement I cannot say) from one of the three postmen who come to me, that the reason that these improvements have not been made is that the town postmen, who do not suffer from this exposure, do not want these accessories provided; and as these men all belong to the same union as the country postmen and the town postmen exceed the country postmen in numbers, the union 722 does not think them necessary. I realise that the Postmaster General cannot create a new union to suit the country postmen, but I hope that the noble Lord will be able to give me some assurance that this matter of the very fierce conditions in which country postmen have to drive will not be overlooked.
§ LORD CHESHAMMy Lords, with you Lordships' leave, may I say a brief word in reply to the noble Lord, Lord Somers? I certainly was not aware that postmen were working under any such conditions, but I most certainly will look into the matter and pass on what he has said to my right honourable friend. I hope it is either not so or that it will be put right.
§ On Question, Bill read 2a; committee negatived.