HL Deb 23 July 1970 vol 311 cc1094-9

5.0 p.m.

LORD DENHAM

My Lords, a Question was put down for Written Answer in another place, and my right honourable friend gave an oral Answer to this Question. The Question was:

"To ask the Minister of Posts and Telecommunications if he will make a Statement before the Summer Recess about his consideration of the postal charges."

My right honourable friend said this, and I will quote his own words:

"Yes. After consulting me the Post Office are referring proposals to the Post Office Users' National Council for increased letter, parcel and other miscellaneous postal tariffs. Their main proposal is that the present 4d. rate for second-class mail should become 6d. next January and the 5d. rate for first-class mail 7d.; and that these new rates should become 2½p. and 3p. respectively on Decimal Day, in accordance with the officially recommended conversion table.

"These services have, for more than two years, been incurring mounting losses and the Post Office have accordingly taken the view since the beginning of this year that increased charges of this order were necessary. Indeed they decided in May to embark upon the printing of decimal stamps at the new rates in order to ensure supplies in time for Decimal Day. I am assured, however, that this does not preclude consideration of alternatives in the light of suggestions from the Users' Council, and until their comments are available the Government remain uncommitted to the Post Office's proposals."

My Lords, that is my right honourable friend's Statement.

LORD STRABOLGI

My Lords, I am grateful to the noble Lord for making that Statement. Arising out of it, I wonder whether he can say whether to his knowledge these rather startling increases are to be the forerunners of other increases in charges for Post Office uses. Secondly, what surplus, if any, is expected to result from them?

LORD BYERS

My Lords, I should like to thank the noble Lord for repeating that Answer to us. These are savage increases. Is the noble Lord not aware that they make nonsense of the Manifesto and claim on which the Conservatives fought the Election, that they were going to keep prices in the public sector down? May I also ask him whether these are operating losses or whether the losses are due to increased capital investment? Can he also say something about the nature of the loss, as there is no indication as to how big it is?

LORD DENHAM

My Lords, the noble Lord, Lord Strabolgi, asked me two questions. He asked, first, whether these increases would be the forerunners of other increases. No, my Lords, it is calculated that if these increases are approved by my right honourable friend—and I stress the word "if"—they should last until the end of the five-year period envisaged. He asked what surplus, if any, would there be after these increases. My Lords, I am afraid that I have not that figure to hand at the moment, but I will try to get it for the noble Lord as soon as possible.

The noble Lord, Lord Byers, said that these proposed increases by the Post Office made nonsense of the Prime Minister's statement that he was going to keep prices in the public sector down. My Lords, again I would stress the fact that these are increases proposed by the Post Office; and again I would stress the fact that Her Majesty's Government are still reserving their position. But this is very much a legacy from the previous Administration—I do not mean that in a critical sense. When the Post Office Corporation was set up by the Post Office Act, the Post Office itself took over a very big burden of losses. I can give the noble Lord, Lord Byers, slightly more details of the losses that were incurred. For the last three years, including the year we are now in, the cumulative losses have been these: for the year 1968–69,£6 million; for 1969–70 (these figures are not published yet)£34 million; and the estimated loss to the end 1970–71 is£90 million. Those are cumulative figures.

I can now give an answer to the second question of the noble Lord, Lord Strabolgi. Although these increases, if they are accepted, will be sufficient to cover financial obligations, there is not expected to be a surplus over and above at the end of the five-year period.

LORD BYERS

My Lords, may I ask the noble Lord, whether these losses are on operating account or is there a capital account element in them? If there is a capital account element is there not some other way of raising the finance?

LORD DENHAM

My Lords, I came into this matter at rather short notice, but I do not think that there is a capital element in these figures. A large part has been wage increases, and the full effect of the recent wage claims has not yet been felt. But with no further wage increases, I think the effect on the deficit over the five-year period of past wage increases is calculated to be something like£200 million.

LORD SILKIN

My Lords, may I ask whether this relates exclusively to letters, or is it over the whole of the activities of the Post Office?

LORD DENHAM

My Lords, I understand that this is for letters and other postal charges.

LORD SILKIN

My Lords, these are losses over the whole range, and not necessarily over letters. May we have an indication of what the losses are in respect of letters alone?

LORD DENHAM

My Lords, the posts alone lost£1 million in 1968–69, and a loss of over£15 million is expected to be shown in the accounts for 1969–70 when they are available.

LORD DERWENT

My Lords, may I ask whether the Statement, taking it as a whole, means, in effect, that Her Majesty's Government will make their own investigation, in conjunction with the Post Office, into whether there are alternative and as satisfactory methods of saving the money, rather than putting up the postal rates?

LORD DENHAM

My Lords, my right honourable friend will keep a very close eye on the methods. The Post Office Corporation is an independent body, so he cannot instruct the Post Office what to do, but he will obviously bear in mind to what extent he thinks these charges are justified. He will also look very closely into the advice given by the Post Office Users' National Council. He will also take into account everything that is said in your Lordships' House this afternoon.

LORD STRABOLGI

My Lords, I am grateful to the noble Lord for his reply, though it does not quite answer the question I asked. I apologise if I did not make myself clear. I do not want to press the noble Lord too much on this matter, because he has not had long notice. But to his knowledge, are there going to be increases in other fields, like telephones, cables and telegrams

LORD DENHAM

My Lords, I can answer that simply. To my knowledge, No. But my knowledge is not very wide.

LORD GRIMSTON OF WESTBURY

My Lords, bearing in mind what my noble friend has emphasised, that the Government are uncommitted, it seems to me that over the last few years, as postal charges have been increased several times so have the losses gone up. Does that not seem to indicate that the more the charges are put up, the fewer letters people write? Is not the same thing going to happen again. As the Government are uncommitted, would they please look at that angle?

LORD DENHAM

My Lords, my noble friend's suggestion will certainly be one of the many looked into and considered. I am sorry to give this rather delayed action answer, but I can now say that it is not intended to increase telephone charges.

LORD SHACKLETON

My Lords, I think the noble Lord has done very well, if I may say so, and we take our responsibility with the Government Front Bench for not asking for this Statement earlier. I should like to ask him one question. There is a pretty high discount rate, which the Government and the Treasury are responsible for fixing. I would ask the noble Lord whether he would give consideration to the point made by the noble Lord, Lord Byers. All the nationalised industries are making heavy payments quite properly—I think the rate is 8 per cent. So therefore there is a certain amount of capital account involved.

LORD DENHAM

Yes, my Lords, I am grateful to the noble Lord the Leader of the Opposition for what he has said, and I shall certainly ask my right honourable friend to consider it.

LORD GARNSWORTHY

My Lords, may I ask the noble Lord whether he would invite his right honourable friend to draw the attention of the Post Office Users' National Council and of the Post Office itself to the likely serious effect, if these proposed charges go through, on the incomes of a substantial number of charities who depend in large measure on their sales of Christmas cards? If it is decided that the rates have to go up, will he also consider giving a special low rate for Christmas cards posted, say, between December 14 and 21, provided the envelopes are not stuck down but have the flaps tucked in, as they used to be? I would draw the noble Lord's attention to the fact that in 1967, when there was a 3d. rate, according to the figures supplied by the Post Office itself, the number of letters posted during the Christmas period was 1,047 million. In 1968, when the postal rates had gone up to 4d. and 5d., the number fell to 944 million. By 1969 there had been no substantial recovery in postings. It looks as though a penny increase results in something like a 10 per cent. reduction in the number of letters posted. I would ask the noble Lord to request his right honourable friend to give very serious consideration to that aspect.

LORD DENHAM

My Lords, I do not think it would be proper for my right honourable friend to make any suggestion to the Post Office Users' National Council, but I can assure the noble Lord that I will draw what he has said to the attention of my right honourable friend, and I am certain that the Post Office Corporation will study his remarks very carefully indeed.

LORD CONESFORD

My Lords, can my noble friend assure the House that these colossal losses are not the result of three weeks of Tory misrule?

LORD DENHAM

My Lords, that is my feeling.

LORD STONHAM

My Lords, can the noble Lord say whether this is an example of the new style government we were promised, and would he convey to his right honourable friend that we find it most unimpressive?

LORD DENHAM

My Lords, this is an example of the sort of problem that the new style Government have found they have to cope with.