§ 8.3 p.m.
§ Order of the Day for the Second Reading read.
§ BARONESS PHILLIPS
My Lords, I beg to move that this Bill be now read a second time. The limit on Post Office borrowing is fixed in terms of the total accumulated debt to the Exchequer which may be outstanding at any one time. The present limit—that is, the upper limit prescribed by the Post Office (Borrowing Powers) Act 1964, subject to a Resolution by another place, which was taken on March 4 last—is £1,320 million. This limit is likely to be reached some time in the summer of 1967—this summer. The Bill proposes that the limit should be extended in the first instance to £1,750 million. It also makes proposals for further extension by Resolution to £2,200 million. So far as can be foreseen, the lower limit should meet Post 115 Office borrowing needs up to about the middle of 1969, and the upper limit should last until some time in 1971. In short, the Bill deals with an increase of £880 million in the Post Office borrowing powers. Total investment requirements are likely to amount to about £1,500 million, with the balance coming from Post Office depreciation and profits, all of which are ploughed back into the business.
Your Lordships will be interested to have a broad and, at this hour, rather short outline of the Post Office plans for the next few years. But before doing this I should like to draw attention to two other matters. First, this Bill contains a new feature, as compared with previous Post Office Bills; namely, Clause 2. Section 10(1) of the Post Office Act 1961 authorises the Postmaster General to borrow from only two sources: the Treasury and the Bank of England. However, the giro service is expected to start next year and, technically, money deposited in giro accounts will be borrowed from the account holders. In this respect the position will be similar to that of money received on current account by banks. Clause 2 of the present Bill is intended to remove any doubt there may be in relation to the borrowing provisions of the 1961 Act.
Secondly, I should like to refer to the general context in which this Bill is being considered. Your Lordships' House was informed on August 3 last that the Government had decided that the Post Office should become a public Corporation, and that a White Paper setting out the Government's proposals would be presented, after the fullest consultation with the representatives of the staff of the Post Office, and after there had been an opportunity to study the Report of the Select Committee on Nationalised Industries, which has been examining the Post Office. The Select Committee's Report was published on February 28, and is being studied carefully by my right honourable friend the Postmaster General and his colleagues. Your Lordships will not expect me to discuss it in detail tonight. The White Paper on the re-organisation of the Post Office will be presented shortly, and I am sure that it will be read with great interest.
116 It may be asked why the Bill should deal with Post Office investment requirements up to 1971 if the Department is to become a public Corporation. The reason is that as Parliament has not yet approved the change in status, the Government did not feel that it would be right to provide for a shorter period than is usual in Bills of this kind.
Although the Post Office telecommunications services employ many people, these services are, by their nature, primarily technological. The postal service, which is being extensively mechanised, relies heavily on manual skills and labour. It follows that the greater part of the money to be borrowed under the Bill will be spent on telecommunications. Broadly speaking, it will be spent in three ways: in overcoming deficiencies of plant that now exist; in providing for growth, both in the number of calls and in the number of subscribers, and also in modernising the system and exploiting new developments. I do not wish to weary your Lordships with a lot of figures. No doubt those of your Lordships who are particularly interested will have read the Post Office Annual Report and Accounts.
While the greater part of the money to be borrowed under the Bill will be spent on the telecommunications services, this is not to say that the postal services are to be starved of capital. Far from it. In 1967-68 the Post Office expects to invest some £26 million in new and enlarged postal building, machines, et cetera, and the capital going into postal machinery will be increasing steadily and substantially over the next ten years. More than half the investment in machines will go into letter-coding and automatic letter-sorting machinery. Postal address codes of the kind my right honourable friend announced recently for Croydon are essential if full value is to be obtained from the new machines. Taking, for example, the postal address, CRO 3BA, the first half, CRO, will be the name of the town to which the letter is going; and the second half, 3BA, will be the actual delivery area to which the letters are to be sorted when they arrive in Croydon. These codes are to be introduced this year in seventeen more large towns, and are expected to be in use in London and 117 some sixty of the largest provincial towns by 1970.
The success of these codes and machines will, of course, depend largely on the co-operation of the public in using them in their addresses, and it is satisfactory to be able to say that experience so far indicates that this co-operation will be forthcoming. We can take pride in the fact that our postal address code system is technically the most advanced in the world. Although all codes are being designed for automatic outward sorting—that is, from one town to another—the British system is the only one that will enable letters at the distant town to be machine-sorted for the individual delivering postman.
At the same time as the intensive mechanisation programme, under which £45 million is to be spent in the next ten years, the Post Office is, and will continue constantly to be, working for the most economic use of manpower. At present, as many of your Lordships will know, Messrs. McKinsey and Co. have been working with the Post Office looking at arrangements in postal sorting offices and public offices; and the counter staff have given the fullest co-operation in this fundamental stocktaking. These efforts are already producing results.
While our postal service is second to none in the world, the Post Office is not by any means complacent. Over the past year there have been complaints about late deliveries and about the unreliability of the service, many, but not all, justifiable. Growing areas to be covered and increasing amounts of mail to be delivered call for more staff each year, and, quite frankly, it has not been possible to keep pace with the demand. For example, extensive and continuous housing development requires something like 300 to 500 more postmen each year for mail deliveries, and this adds about half a million pounds each year to operational costs without significant increase in revenue.
Finally, my Lords, a word about the giro service. The centre will be at Bootle where a complex of buildings is being erected. It will include one of the largest computer centres in Europe. The facilities to be provided are based broadly on discussions with European countries who run a giro service. Because this is a new 118 service it has proved possible to use modern techniques and equipment, including special and unique features designed to make the service flexible and to meet the varying needs. Suggestions and criticism from the public have been invited and taken into account. Public reaction has been most encouraging. Discussions have taken place with the clearing banks about the arrangements for links between the two systems, and there is every reason to believe that the services will be complementary. Some ten days ago my right honourable friend presented the latest in the series of "Post Office Prospects" White Papers. It looks ahead for one year, as against the four-year period provided for in the Bill; but it emphasises what I have said to-day.
My Lords, the Post Office, employing as it does over 400,000 people, is a vast organisation providing a wide range of services. I have recently had the privilege of visiting quite a number of district post offices and sorting offices, and I have been impressed by the real dedication that the workers have to their jobs. The demand on the Post Office is growing, and the purpose of this Bill is to provide it with the finance that it will need to meet those demands effectively and efficiently. I beg to move that this Bill be read a second time.
§ Moved, That the Bill be now read 2a.—(Baroness Phillips.)
§ 8.14 p.m.
My Lords, we are grateful to the noble Lady for introducing this Bill and explaining what it does. I am bound to say that it is an extremely simple Bill—even I can understand at least the wording of it. One cannot help reflecting on the curious state of affairs that when 2s. is added to or subtracted from a prescription charge, all Hell is let loose; yet when one seeks to borrow £880 million it goes through almost at the nod of a head. It certainly will receive the nod of our heads; but it also gives us the opportunity to discuss the Post Office and some of the implications. I think that frequently the Post Office services are greatly maligned. On reflection it is really remarkable that for the price of 4d. you can sometimes even have your letter collected, but certainly delivered to any house in the British Isles; and that for the price of 119 3d. your own house can be attached by wire to another house. Although when one's telephone bills and postal charges have to be met this represents a large cost, in fact it is, individually, a relatively inexpensive service.
It is encouraging to find that the Post Office is one of the—I was going to say "the only"; but this is not quite true—nationalised industries which really does pay its way. In 1963 to 1966 it made a profit of £40 million, which represents a return of about 8 per cent. on its capital, which is the target at which the Post Office aims. But within this figure of overall profit some of the activities of the Post Office make a loss. The cable services, for instance, invariably make a loss. The sad part is that it does not matter how many cables you send; the more you send the bigger the loss. It would be a great mistake if we were to think that each individual facet of the postal services must make a profit, because I do not think that that should be so. I hope the mere fact that the cables service does not make a profit will not lead the Government to think that it should be dispensed with.
One wonders what the future of the G.P.O. will be. Will it become more modern? Will it become more efficient? Will it become more expensive? I suppose the answer is that it will become all three. The noble Lady said that Messrs. McKinsey are engaged on a study of business efficiency in the Post Office. They have been on this study, I think, for two years. I was delighted to see that the former Postmaster General engaged a firm of efficiency experts. I was only sorry that it had to be an American and not a British firm. I wonder if the noble Lady could tell us whether they have yet made a report; or whether they have made only a partial report? If they have not, when are they likely to make one? Can the noble Lady also give an assurance that the report will be made public? I think it is essential that it should be made public, because it is impossible to make any assessment of charges unless one knows the full facts.
I wonder whether in this respect the noble Lady could give an assurance that there will be no increase in postal charges until this report is made. I ask this for 120 the specific reason that the Postmaster General said a short while ago that postal and telephone charges would be held at their present level until, I think, the end of the year, or for most of this year. From that, may one assume that the report is likely to be in the Minister's hands at least within a few months? Of course, the job of an efficiency firm is to make the entity efficient from a management point of view. In their eyes, this might justly be achieved by reducing the standard which at the moment obtains in the Post Office. I would urge the noble Lady in turn to urge upon her right honourable friend that we should not accept a reduction in the standard of postal services; because the standards in this country are uniquely high and I think it could be the greatest mistake to see them reduced.
One such reduction that immediately comes to mind is the delivery of letters not to the door but to the garden gate. I hope that will be resisted vigorously, even if the firm of management experts recommend it. The whole kernel of efficiency in postal services is that the letters are delivered to one's house and not to a point 10 yards, 50 yards or 100 yards away from it. Rather than a reduction in standards I would prefer an increase in the charges. That may seem a terrible thing to say; but when one looks at the postal charges in other countries one finds those in Britain are really rather reasonable. In the Netherlands, Italy and America the charge for a letter is 4d.; in Belgium it is 5d.; in Denmark and France it is 6d.; in Sweden it is 7d.; and in West Germany it is 8d. On the other side of the coin, in Spain it is only 1d. I would leave it to the noble Lady to say whether we could ever hope to emulate that.
The noble Lady referred to the extension of postal coding. One can only assume from this that the experiment which has been carried on at Norwich has proved to be successful. It has been going on now for some six or seven years, and I am slightly surprised that no action has been taken about it until now. One would have thought that sufficient time had been allowed for information to be gathered from the experiment. If it was good, one would have expected to see the service extended to other towns; and if it was bad it should have been scrapped. It seems to me extraordinary 121 that it has apparently taken the Post Office seven years to discover whether or not the service was worth carrying on.
Can the noble Lady give us any idea at all about the progress which has been made, and will be made, with substituting the dialling system for selecting telephone numbers by a push button form of selection? One gathers that this is the coming thing, and that push button selection will enable one to get telephone numbers more quickly and accurately. Is this system likely to come into operation fairly soon? There always is a cry of "wrong numbers", and everyone complains vigorously about perpetually getting a wrong number. I do not think that this happens frequently, though I must admit that it did happen to me last week. I made a call from here to a firm, and to my surprise I found myself connected with the Lambeth Mortuary. I asked the good lady if she would dial the number again and then I was met with the very responsive reply of, "Look, darling, I have just told you, this is the Lambeth Mortuary." I asked the operator if she would be good enough to dial a third time, and suggested that she might care to determine whether or not we had got the right number. The lady was becoming a little brusque. She did try, and on the third occasion the lady at the mortuary roared with laughter. I am bound to say, as one who was slightly irritated, that I wondered what was the cause of her merriment, and I was constrained to ask her whether the cause of her merriment was that a corpse had just sat up. But such mistakes in telephone numbers do not happen very often.
I offer as a last suggestion and thought for the noble Lady something which I think is not irrelevant to the Bill. One finds that more and more people in this day and age are living on their own. In 1966, of all the old-age pensioners living alone apparently only 18 per cent. of the men and 15 per cent. of the women had telephones. I know that there is always an argument about giving forth subsidies, and I do not wish to pursue that question now. But this is a point which the Government should consider. Is it right that people who are old and sometimes chronically sick should live on their own without any form of communication with the outside world? Frequently a telephone may be the only form of social 122 contact that these people have, and it may be a vital source of contact with a doctor. It would be interesting to know whether the Government have any ideas on this subject. We certainly wish the postal service well, and I hope that it enjoys its extra £880 million.
§ 8.24 p.m.
§ LORD POPPLEWELL
My Lords, in giving a general welcome to this little, but, as it were, very costly Bill, I should like to pay tribute to what is now taking place in the Post Office. I think it correct to say that, for the first time almost since its inception, some real thinking is taking place about how to adapt the Post Office service to modern requirements. I understand that the firm of consultants which has been brought in has been giving interim reports; and I wish to draw attention also to the work of the Select Committee on Nationalised Industries in another place which has just completed a full-scale investigation into the workings of the Post Office. I refer to this because, as Chairman of that Committee, I was responsible for persuading it to conduct this investigation. They commenced the inquiry while I was Chairman and the work was continued after the last Election when I retired from the other House.
If your Lordships have not read the Report which the Committee have issued, I commend it to you because a real probe has been made. It will be most interesting to see how far the present Postmaster General, with his very progressive ideas, will act along the lines of separating telecommunications from the post and how far this new public utility company, as it were, will operate in that way. If these proposals are adopted, as I am sure that they will be, it will be interesting to see the effect of operating the Post Office on modem lines.
The noble Earl. Lord Ferrers, referred to the profits made in the Post Office in the past. A few years ago, instead of the surplus going to the Treasury, it was ploughed back into the Post Office and I think this greater financial freedom set a very good trend. To those of us who have inspected district offices and seen the mechanisation which has taken place in respect of letter sorting, and other vast changes in Post Office work, it is obvious that it is a step in the right direction. I think we shall be well justified in allowing this Bill to go through 123 with the blessing of your Lordships' House.
§ 8.27 p.m.
THE LORD BISHOP OF NORWICH
My Lords, as Norwich has been mentioned, I think I might say just a word, from the point of view of the user with regard to the extension of the coding system. This system was started at about the time that I went to Norwich, and I was a little apprehensive because I thought it unlikely to prove workable. I thought that people would not succeed in remembering code numbers. That is the most obvious and simple objection to the system, but it seems evident that people do remember the numbers without difficulty. Whether or not in extending the system more widely this will prove more difficult, I do not know. Possibly there may be means by which those who wish to be helped to recognise areas within the scope of the code may be assisted.
"Nor" may be easy enough to remember, but it may be more difficult to remember whether somebody living in one area will be likely to be "67 J" or somebody living in another area may more likely be "120 Z". This is where the difficulty arises, but despite this most obvious liability, in fact the system works quite clearly, and as it works there is everything to be said for its wider adoption. It is very good to think that Norwich is leading the way in this respect, and to some extent it consoles our drooping spirits for having been knocked out of the F.A. Cup last Saturday.
§ 8.29 p.m.
§ THE EARL OF IDDESLEIGH
My Lords, I wonder whether the Post Office would consider issuing a code in telephone manners. It is my fate to be continually rung up when I am listening to a good wireless programme. In the middle of the second movement I am rung up by someone who wants me to do something. It is of course always delightful to be rung up by one's friends, but it is not a delight to be rung up by someone who wants one to take part in a brains trust or to open a bazaar. It is a bore. I think that some telephone man to protect the public from being continually rung by people who want them to do things would be a great advantage. The Post Office ought to protect those 124 who are engaged in the other Post Office activity of listening to the radio or television. At any rate, I hope that Her Majesty's present Government will not make the mistake the Tory Government made, of advertising the telephone service in terms of: "Somebody wants you to ring them up". I beg that our privacy in this matter may be respected, and I venture to put it in the mind of the Postmaster General that some code of telephone manners would be exceedingly desirable.
§ 8.32 p.m.
§ BARONESS PHILLIPS
My Lords, I should like to thank all noble Lords who have welcomed this Bill. I would say to the noble Earl, Lord Ferrers, that I hesitated to describe this as a simple Bill. I agree that it is simple, inasmuch as it is readable; but, to my mind, anything which deals with millions of pounds deserves some better adjective than "simple", and that is why I avoided using the word. I was delighted that he also took the view, which many of us have held for a long time, that we get a remarkable service of postal deliveries for a ridiculously low price. I can safely assure him that one thing my right honourable friend would not countenance is a reduction of standards. Some experiments have been carried out—for instance, the "garden gate delivery", but people did not like it, and at the present time there is no intention of going on with these experiments. When I suggested the "garden gate delivery" in my own locality, it was put to me that it was difficult enough to keep a plant in the garden, let alone a letter box. No doubt the noble Earl lives in a better-behaved area.
I was delighted to learn from the right reverend prelate that people do remember numbers. In this increasingly complex society, if some individual could devise some scheme by which we can more easily memorise telephone numbers it would make life easier for us. The right reverend Prelate will have noted that I quoted CRO for Croydon, and this leads me to believe that there will be some indication of the place in the telephone code. I should like to compliment my noble friend Lord Popplewell on the hand he had in the excellent work of the Select Committee on Nationalised Industries. I recommend their Report 125 to noble Lords. It makes fascinating reading, and every suggestion made is of great merit.
Like the noble Earl, Lord Iddesleigh, I find people are apt to ask me to do things. As we share the same fate, perhaps I may suggest to him that this is sent to chasten us—and probably it is very good for us. My own protection, one which the noble Earl may have discovered, is not to be in the telephone book. It has the disadvantage that old friends do not discover you, but at least it protects you from unwanted telephone calls. I think that the noble Earl's idea of a code of telephone manners is an enchanting one. In view of the fact that telephone "tapping" is highly criticised, I do not know how my right honourable friend would cope with the idea of an automatic intervention, but I will certainly place the suggestion before him.
The noble Earl, Lord Ferrers, did me the courtesy of sending some of his questions in writing earlier, so that I had an opportunity of investigating them. I am happy to tell him, apropos charges, that my right honourable friend has recently stated in public that he has no intention of increasing charges.
§ BARONESS PHILLIPS
My Lords, I should not like to put any words into the mouth of my right honourable friend. I simply repeat what he said: that he has no intention of increasing charges.
§ BARONESS PHILLIPS
My Lords, as regards the question of push-button telephones, there has been a small experiment conducted in one exchange in London, but it cannot be considered economic until there is a sufficient number of electronic telephone exchanges. This matter has not been shelved but is in the experimental stage at the present time.
On the noble Earl's question about the firm of McKinsey, they will not be presenting a report in the usual sense. They are giving a continuing series of advices, some of which are dealt with on the spot, but my right honourable friend is going to consider the extent to which this series 126 of advice notes (if I may use this phrase) will be made public when this firm have completed their task. It may interest the noble Earl to know, apropos charges, that my right honourable friend has said that he would not increase telephone charges even though installation costs the Post Office £120 as well as maintenance charges, while the rental is only £14 a year. To use my right honourable friend's phrase, this is "commercial nonsense".
I think that I have covered the points raised by noble Lords. I am grateful for the cordial reception the Bill has had, and with my noble friend Lord Popplewell I would pay my tribute to the men who go out, day after day, in the rain and wind to collect letters, take them back to the sorting offices and then go out again to put them through our letter boxes. I should like it to go on record that we appreciate very much the work that is done at this level.
§ LORD PARGITER
My Lords, before my noble friend sits down, when she mentions £120 for installation costs, is she talking in absolute or in relative terms?
§ BARONESS PHILLIPS
My Lords, I will give the noble Lord the whole of my right honourable friend's words. He said:Telephone rentals have not been increased since 1961 and the present rental charge of £14 is commercial nonsense. It is not simply a question of the instrument in a subscriber's house. In addition there is the cable and the complicated exchange equipment for subscribers' use. All this costs the Post Office £120, and in addition there are of course maintenance charges.
§ LORD PARGITER
My Lords, with respect, the question I asked was whether the noble Lady was speaking in absolute or relative terms. Obviously, if in some cases installation cost £120, it might in other cases be less, or more. If this was the absolute cost, and the Postmaster General was taking £120 in the maximum case, there must be many in which the cost is far less. Then rental charge against this must also be qualified.
§ BARONESS PHILLIPS
My noble friend will appreciate that it would he wrong for me to give him a direct off-the-cuff reply in view of all the other things that were said. I should think—and I put it no higher than this—that this is an average. However, if my noble 127 friend desires an explanation, I will send him a reply in writing.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.