POSTAL CHARGES

HL Deb 25 March 1965 vol 264 cc744-8

4.15 p.m.

LORD HOBSON

My Lords, it may be for your Lordships' convenience if I now repeat a Statement on Post Office charges that has just been made in another place by my right honourable friend the Postmaster General. If I may, I will use his own words:

"As I warned the House last November, I discovered upon taking office that the finances of the postal services were in a serious condition and were deteriorating. Projections over the five-year period then indicated a shortfall of more than £120 million below the target set by the previous Government. The latest assessment is that, in terms of their share of the Post Office financial target for the five years beginning 1963–64, there will be a cumulative shortfall amounting to some £32 million at the end of this month, some £64 million by March, 1966, and about £150 million by March, 1968. This situation arises for two main reasons. First, there is an inherited burden due to the failure of the previous Government to take obviously necessary steps at the proper time. Second, there is the fundamental character of the postal services, with their heavy dependence on men to collect, handle and deliver the mail, which makes it very difficult to absorb rapidly rising costs, especially in the field of wages.

"The first and most important task is, therefore, to improve the productivity and profitability of the postal services. I have accordingly commissioned a fundamental and far-reaching examination of the problem by Messrs. McKinsey—the eminent management consultants. We have proposed a joint working party with the staff to work in parallel with them. I shall also press forward with modernisation, to speed up postal mechanisation and prepare the way for its more effective application by firmly encouraging the use of standardised envelopes and progressively extending the use of postal codes to the country as a whole.

"But these and other measures which I have in mind cannot yield the substantial sums now required to meet the shortfall. Nor would drastic and immediate cuts in service provide a remedy even if they were acceptable to the community. The Telecommunications Services are in no position to fill the gap (even if it were right for them to do so) because they are only just about achieving the financial target themselves.

"The Government have, therefore, reluctantly concluded that an increase in postal charges is inescapable. The extent of these increases has been decided in the light of the Joint Statement of Intent on Productivity, Prices and Incomes. My colleagues and I thought it right that the principles of price reviews which it is intended to establish should be both tested out and applied as vigorously in this case as in the private sector. The proposals on productivity and modernisation must be seen in this context. The main change proposed is an increase in the minimum charge for inland letters to 4d. The first weight step will, in future, be 2 oz. thus actually reducing the cost of the 2 oz. letter by½d. This is estimated to yield £21 million in a full year. Other proposed increases affect inland postcards, printed papers and samples, newspapers, parcels and express service. Commonwealth rates which are linked with inland rates will be brought into line, but, to help exporters, overseas rates generally will not be increased. I propose to abolish inland charges on articles for the blind. The total yield of the change is estimated to be £37 million in a full year. These changes will come into force on May 17 next.

"A White Paper, giving details of the proposed changes and explaining the situation more fully, is now available in the Vote Office. Regulations to give effect to the proposals are being laid before Parliament to-day."

My Lords, that is the end of the Statement. The White Paper referred to is now available in the Printed Paper Office.

4.20 p.m.

VISCOUNT DILHORNE

My Lords, I am grateful to the noble Lord for reading out this very long Statement. May I ask him to take note of the fact that the endeavour of Her Majesty's Government to place any responsibility for any unpopular action that the Government are taking, after six months of office, on the shoulders of the previous Administration, is most objectionable and wholly unacceptable? It seems to be becoming a constant habit to use Statements and White Papers for the purpose of political propaganda.

The second reason put forward in this Statement is: the fundamental character of the postal services, with their heavy dependence on men to collect, handle and deliver the mail, which makes it very difficult to absorb rapidly rising costs, especially in the field of wages. Would the noble Lord confirm, as I think he can, that the main reason for these increases in postal charges that he is announcing is wage increases? I should like to ask him to give a positive answer to that question.

The Statement goes on to say that the first and most important task is, therefore, to improve productivity, and that the step which has been taken in relation to that is to call in a firm engaged in private enterprise. Of course, one welcomes any step which is taken to improve productivity, but is it the case that there are any restrictive practices in existence which restrict modernisasion? I should be grateful if the noble Lord would tell us.

One cannot debate the matter now, but I think that one is entitled to ask these questions. I must say I find the end of the Statement, which refers to the Joint Statement of Intent on Productivity, Prices and Incomes, not quite as clear as it might have been, particularly when it says, after that reference to the Joint Statement, that The proposals on productivity and modernisation must be seen in this context. The only proposals of which we have been told in this Statement are the use of standardised envelopes and the use of postal codes. I am not quite sure how one puts those in that context. Perhaps the noble Lord, if I might ask him this finally, can say—as I cannot say from memory—whether the regulations to which he referred are subject to Affirmative Resolution. But presumably, whether or not they are subject to the Affirmative Resolution, we shall have an opportunity of debating them if we so wish.

4.23 p.m.

LORD HOBSON

My Lords, I shall endeavour to answer the somewhat short speech that the noble Viscount has made. First, let me say that these regulations will be subject to the Negative Resolution procedure. In answer to the first question —and I trust my memory will serve me aright—this was one of the many skeletons that we found hanging from the chandeliers at No.10 Downing Street. There was in the last year a loss of £8 million on the postal services, and, frankly, this had to be met. The reason action was not taken more quickly was that we were having a look at the whole working of the postal service with a view to effecting economies. Nobody likes to put costs of anything up, but this is an inescapable duty, particularly in the light of the Command Paper on Nationalised Industries, which presupposes an 8 per cent. return.

LORD CONESFORD

My Lords, may I ask a question purely for information? Was the 3d. post making a profit or a loss? If it was making a loss, what was the point of the advertisements asking people to write more letters?

LORD HOBSON

The answer to the more facetious part of the question is, of course, in order to get more revenue. With regard to the first part of the question, frankly, I should need notice of that.

LORD ALPORT

My Lords, may I ask the noble Lord whether he recollects that very much the same sort of skeleton was found in the cupboard by the Government in 1951 after the noble Lord himself, I think, had been at the Post Office as Assistant Postmaster General? Is not this problem of the viability of the postal services a continuing one, and is it not a fact that the greatest losses are in the telegraph services, whereas the postal services on the whole are not doing too badly? Why, therefore, has no additional charge been made on telegrams?

LORD HOBSON

My Lords, the telegraph services are not affected by this Statement; they are a social service. With regard to what happened prior to 1951, I remember once being described as "Britain's profiteer No. 1" because of the amount of profit made by the Post Office.

VISCOUNT STUART OF FINDHORN

My Lords, I am getting quite used to the present Government putting the blame for everything on the late Administration. Would the Minister give a definite undertaking that when he nexts comes to this House for increased charges in the Post Office or in other directions the present Government will take the blame?

LORD HOBSON

My Lords, we will always endeavour to be truthful.