§ 12.31 p.m.
§ LORD DENHAM
My Lords, I beg to move that this Bill be read a second time. The Bill is needed, first, because the investment plans of the Post Office will early in the New Year cause its requirements for loan capital to exceed its present permitted limits. The opportunity is also being taken to ask Parliament to authorise my right honourable friend to release the Post Office of debt attributable to accumulated losses of the 1230 postal and remittance services. I shall try in my opening speech to explain to the House why these extra borrowing powers are required and why the proposed write-off is justified, and to give the House some information about the progress and intentions of the Post Office. But noble Lords are well aware of the scope, size and complexity of the Post Office activities and will not, I am sure, expect me to cover every aspect of these.
In 1969 the Post Office was made into a public authority. At that time its debts had grown to £1,680 million. Since then its business has been expanding very rapidly—
§ LORD SHACKLETON
My Lords, I wonder whether I may interrupt the noble Lord. He might find it easier to handle his impromptu speech if he read it a little more slowly.
§ LORD DENHAM
I shall certainly take the point of the noble Lord the Leader of the Opposition. As I said, at that time its debts had grown to £1,680 million; since then its business has been expanding very rapidly and this has caused the capital base to grow as well. The Post Office Act 1969 set a limit for borrowings by the new corporation of £2,300 million; this could be extended by Order to £2,800 million, which was done in April, 1971. In 1969 it had been thought that these borrowing powers should be sufficient for about four years, but by the beginning of the current financial year actual borrowings had reached £2,477 million and a further £400 million or more will be needed by the end of March, 1973. The borrowing limits need, therefore, to be raised again by an amount sufficient to cover the next substantial phase of Post Office investment.
The Post Office's capital expenditure programme has been expanding steadily and is now extremely large. The Post Office have produced a most helpful brochure, from which noble Lords will probably have seen that the bulk of the new investment is being taken by the telecommunications business. While investment in telecommunications must predominate, because of the growth and 1231 capital intensive nature of that business, I want to make it clear that neither the Government nor the Post Office have any intention of allowing the postal service to fall into neglect. For many years to come it will continue to fulfil its traditional and vital role as the provider of essential communications services to the nation, and where capital investment can bring advantage the Government intend to see that posts receive their proper share. Over the next four years some £190 million will be required to maintain existing services, to increase efficiency and to reduce costs. About 70 per cent. of it will be spent on modernising or replacing buildings that are now too small or too out of date, or occupy sites that have to be surrendered for various reasons. Most of the remaining capital expenditure will be devoted to a progressive mechanisation of work in large sorting offices. The Post Office plans increasingly to concentrate the sorting of letters and parcels on to a limited number of handling centres with automatic or mechanised sorting equipment, in order to reduce the heavy dependence of the business on manpower.
Most of the total capital expenditure will, however, be for the large and ambitious programme for the modernisation and expansion of the telecommunications business. The projected growth in demand looks daunting. In the next five years, business is expected to require over 500,000 new exchange lines while residential subscribers will have risen by some 5 million, taking the telephone into more than two-thirds of the households in the United Kingdom. This means that the size of the system will have doubled in ten years, rising to 16.5 million exchange connections in 1978. Considerable expansion is also envisaged in the Telex service, in data transmission and in private circuits. The number of telephone calls is expected to grow from 12,000 million last year to an estimated 23,000 million in 1977–78. They will have nearly trebled in ten years. Virtually all customers will be on STD by 1974, and by 1978 it will be possible for them to dial all calls within the United Kingdom.
While expenditure in the current financial year is expected to be about £700 million, further investment of £4,000 million will be needed over the five years 1232 from March, 1973. The Post Office hope to raise something approaching half of this from internally generated funds; that is, profits and depreciation. The remainder would need to be borrowed from the National Loans Fund. The net new borrowings by the Post Office have in recent years been on a rising scale and are expected in the current financial year to exceed £400 million. With the continuing growth in capital requirements foreseen, the net borrowings in the next four or five years are expected to lie between £400 million and £500 million a year. Provision has therefore been made in Clause 1(1) of the Bill to increase the borrowing limit by £2,000 million.—It is expected that this should he sufficient for this financial year and the next four years.
My Lords, the Post Office is, as I am sure you know, one of the biggest businesses in the country. Its postal service, telecommunications business, Giro and remittance services together employ some 400,000 people. Its operations affect everyone in the country. The House will therefore welcome the Post Office emphasis, so noticeable throughout the pages of their brochure, on securing value for money and improving the quality of service to their customers. This year about 1.5 million new customers are being connected to the telephone system—an increase of 35 per cent. over the number for two years ago. Currently, about 80 per cent. of new orders are met within 40 days; over one-third are completed within five days. But 20 per cent. of all applications still have to go on a waiting list with an average waiting time of five months, and this list stands at around 220,000. The Post Office and Government consider this situation quite unacceptable, and urgent action is being taken to reduce the list in the short term.
In the longer term, the hope for really major improvements lies in the modernisation of the telephone network. At present 90 per cent. of the system consists of the electro-mechanical switching equipment, called Strowger, which was invented in the last century. It has given good service in the past, but it has many shortcomings compared with more modern equipment. For example, it is bulky and expensive to maintain. The really advanced telephone exchange equipment capable of meeting the needs 1233 of the system in the 1980s and beyond could not be developed for some time. Meanwhile, the Post Office has been studying the need to introduce modern equipment at an earlier date. For some years, Crossbar—a later electro-mechanical development than Strowger—has been ordered for trunk and some large local exchanges, while an electronic recd relay system has been ordered for small local exchanges. The choice in the immediate future for the bulk of large local exchanges has yet to be made.
My Lords, I now turn to the second proposal in the Bill, contained in Clause 1(2). As a result of past losses, the postal business is bearing a heavy burden of debt from which the Post Office has sought to be released. From April 1961 when Post Office finances were first separated from those of the Exchequer, to March, 1973, the total cumulative deficit on postal and remittance services will be about £190 million. The Government have concluded that this deficit should be written off as irrecoverable. Clause 1(2) will accordingly enable my right honourable friend, with the consent of the Treasury, to release the Post Office from the liability to repay the debt arising from these losses, subject to an overriding maximum of £200 million which allows a margin for contingencies. In reaching this decision the Government have taken the following factors into account.
Nearly three-quarters of the costs of the postal business are labour costs, and it is therefore specially vulnerable to wage inflation. Yet at the same time, of its three main tasks of collection, sorting and delivery, only sorting lends itself to substantial labour saving by mechanisation. The postal service faces sharper competition from an expanding telephone service and possibly changing social and commercial habits, and there are signs that the steady growth of traffic and revenue which occurred in the past can no longer he depended on.
The Post Office is making vigorous efforts to contain cost increases by higher productivity and to increase traffic by more vigorous marketing. The Government attach much importance to the successful fulfilment of these plans, but they cannot alone suffice to make the postal service viable or to make any substantial contribution to the reduction of past debt. 1234 Both the Government and the Post Office consider that it would be wrong to charge present-day users higher prices than are needed to cover current costs in order to overhaul losses going back to 1962. Nor would it be right to introduce now the service cuts that the Post Office Users' National Council advised against as recently as January, 1972.
Experience in many other countries confirms that the task of achieving viability is difficult in an industry which still gives a form of personal service to its customers and which will inevitably remain less highly mechanised than most. But by including the write-off in this Bill, the Government are seeking not only to mitigate future tariff increases but also to give the postal business a fresh start. With the burden of past debts removed and a cumulative reduction in interest charges of some £100 million over the next quinquennium, the Government believe the right conditions will be created for management and staff to co-operate in renewed efforts to improve efficiency and productivity while providing the services the public needs. The Bill is simple and short and, of course, non-controversial. I therefore commend it to the House. I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Denham.)
§ 12.43 p.m.
§ LORD STRABOLGI
My Lords, I am sure the House is grateful to the noble Lord, Lord Denham, for explaining the provisions of this Bill, which is a Money Bill; but it allows the House to consider the whole general workings and problems of the Post Office. I am sure that we are grateful to the noble Lord for the survey he has given us. As he said. Post Office finance is a very difficult problem. The Post Office is heavily dependent on manpower and is probably likely to be so in the foreseeable future. It is therefore particularly vulnerable to inflation, and to the type of inflation from which we are suffering at the present time. Yet it cannot reduce its manpower and still retain a proper service to the public; nor are there many areas in the postal service where mechanical techniques can be introduced. I know that great efforts are being made to reduce costs. I am sure that it is right to ask Parliament to agree to this write-off to the tune of 1235 £200 million. As the noble Lord said, this will give the Post Office a fresh start. I hope that the Post Office will be kept on viable lines in the future while still maintaining its tradition of public service.
This may not be so easy when and if the freeze ends. I suspect that the freeze will last longer than the Government are prepared to admit; but it will have to end some day. I wonder how then the Government will view the future prospects of the Post Office. I see in the booklet to which the noble Lord, Lord Denham, alluded, Post Office Investment for the Future, published last October, just before the freeze, that charges may have to go up if the Post Office is to find a further £2.000 million internally, from profits and depreciation.
I hope, therefore, that the increased borrowing powers will enable the Post Office to maintain the same standards of service at not too unreasonable a cost and that it will not be necessary to curtail these, particularly in the postal sector. I should like to ask whether the Government think the total investment in posts of about £252 million over the next five years will be enough, particularly if one takes into account the new building programme, including new sorting offices and mechanical aids.
My Lords, turning to telecommunications, I understand that the Post Office, as the noble Lord has said, have entered into a development contract for 16 electronically-controlled exchanges, which are known are TXE 4. I should like to ask about progress as we have now reached the planning date when the results are due for consideration at the end of this year. As the noble Lord said, it will be necessary, eventually, to replace Strowger with a number of more advanced exchanges—particularly if the excellent new pushbutton instruments are to be properly served. I believe that these will be in general use by the mid 'seventies. I understand that by 1981 the Post Office hopes to have over 19 million exchange lines and that by then, as the noble Lord said, three out of very four families will have a telephone. I hope that the Government, after considering the Post Office conclusions on TXE 4 will announce their views to Parliament first—this is most important—and allow the matter to be debated before a final 1236 decision is made. We on this side of the House are concerned about this, and I believe there is also concern in the other place. There was a Question asked there yesterday, whether the Government would consider publishing a White Paper, but no definite reply was given, I should like to stress how important it is that the Government should publish their conclusions with the Post Office in the form of a White Paper or possibly a Green Paper; and also that before making any final decisions they should arrange a demonstration to the Members of both Houses of Parliament and to the Press.
My Lords, I should like to ask about development contracts. At one time—and I know a little about this—these contracts always seemed to go to one or two favoured manufacturers. Although the "ring " has been broken now, at least theoretically, we are not yet satisfied that in practice this has made a lot' of difference.
Although there are now some 16 million telephones, as the noble Lord said, there is still a waiting list of about 220,000. The noble Lord said that the waiting time was still about five months but that action has been taken to reduce this number. I should like to ask what action he means. Perhaps he could let us have details when he comes to reply. I wonder whether some of the delay is attributable to the manufacturers, G.E.C./A.E.I., Plessey and Standard Telephones. Our target must surely be that one day every household will have its own telephone as a matter of course and not be dependent on the nearest call box, which is often put out of action by vandalism.
I must ask, too, what action the Government propose to take with the Post Office to end sharing a line. I believe that nearly 2 million subscribers have to share and that potential subscribers are still being told that if they want a telephone they must share a line. I think that sharing a line is probably the next worst thing after sharing a kitchen which, even in the war-disturbed times, was considered not a good thing to do. I hope that the Government and the Post Office will give this matter their urgent consideration. I should like to pay tribute to the Post Office engineers and to the telecommunication operators and those who serve on the switch board and on 1237 the directory inquiry side. I have always found them helpful, cheerful and most efficient. Indeed, I think that the Transatlantic service particularly is absolutely first-class. I know from personal experience what an amount of trouble they take to trace cables to ensure that they reach their destination, and even to trace the recipients of calls if they do not happen to be at home.
I come now to the postal service. I should like to congratulate the postmen on the splendid job they do while working very difficult hours in all kinds of weather. Many postmen have to report at 3 o'clock in the morning, which in the middle of winter cannot be very pleasant. Many work a six-day week. Their health is often put at risk. I should like to ask the Government whether they would look into the whole question of the health and welfare of the Post Office workers. Apart from the general hazards, there is also to-day the particular danger from letter bombs. What plans have the Government for compensation? I should like to pay tribute particularly to the postmen of Northern Ireland and to their outstanding devotion to duty in these very difficult times.
My Lords, anything that can be done to make sorting easier and quicker is to be welcomed. The postal codes seemed to be very complicated at first, but I think we are getting used to them now and they are being increasingly used particularly for business letters which, of course, provide the bulk of the correspondence. I think that the outstanding non-user of the postal codes seems to be the Post Office. I find my telephone bill is still addressed to the old district number. I suggest that the Post Office might tell their telecommunications manager about the new codes and ask him to adopt them, if only to set us all a good example. We must also make up our minds whether the postal service, which last year lost £12½ million, is to be treated as a part service, or is a complete commercial department which has to make a profit at all costs. Speaking for myself I have never been clear about why the telecommunications side, which is the highly profitable side of the business and during the same period made a profit of £58 million, cannot be taken into account in balancing these accounts. What would be intolerable 1238 would be to get into a situation where profitability was the only yardstick and the service to the public put at risk. I should like to say what a great debt we owe to the Post Office Users' National Council and particularly to its Chairman, my noble friend Lord Peddie, who I am glad to see present for this debate. Some of the proposals made by the Post Office about a year ago to cut down costs at all costs would have caused the greatest inconvenience to the public. I am very glad that these proposals were rejected by the Council and that the Post Office is now to undertake a comprehensive survey of the needs and wishes of users.
My Lords, in conclusion I should like to refer to Giro. When I asked on July 18 last, which Government Departments used Giro I was told by the noble Earl the Leader of the House, who is responsible for the Civil Service Department, that the information is not collected centrally, but that it is likely that most Departments make some use of Giro. If this were not the Christmas season I would say that that was a rather dusty answer. I hope that the Government will be more positive and will encourage Departments to use Giro more frequently, and have some idea of which Departments do use it. Perhaps the noble Lord, Lord Denham, can tell us a little more about that. Having said that, I should like to say that I warmly welcome the Bill. I hope that it will herald the opening of a great new chapter in the history of the Post Office; that it will pass rapidly through all its stages in your Lordships' House and soon receive the Royal Assent.
§ 12.56 p.m.
§ LORD PEDDIE
My Lords, I join with my noble friend Lord Strabolgi in welcoming this Bill and I would express my congratulations to the noble Lord, Lord Denham, for the manner in which he presented it and for giving your Lordships' House the opportunity to learn much about the background against which this Bill was brought into being. I am also appreciative of the fact that he painted a picture not only of the difficulties confronting the Post Office to-day but also of the immense possibilities that are before it. I believe that in making available more finance this Bill will give aid to the development of that programme. I suppose that at this stage I 1239 should declare an interest, being the Chairman of the Post Office Users' National Council, but I think that is an interest which should not deter me; indeed it should encourage me to make some comments in this debate.
As the noble Lord, Lord Denham, indicated, Clause 1(1) increases the limit of the borrowing powers by £2,200 million. It is important to remember that that will be but half of the total estimated capital expenditure over the next five years. As recently as April of this year the Post Office Users' National Council, in a report on telecommunications, laid great stress on the fact that under-investment in the past had been one of the major problems of the Post Office and was a contributory factor to many of the difficulties experienced to-day. I welcome the action of the Government in coming forward with this Pill, realising as I do that it has been the policy of successive Governments in the past that has restricted the Post Office from being able to secure adequate capital development.
I would also comment on the current problem of the Post Office on the telecommunications side to which the noble Lord, Lord Denham referred; this is, the replacement of Strowger. I know that this matter will not form a significant part of the capital expenditure over the next five years; it relates more to the medium term. But it is a matter of some significance, and was referred to not only by the noble Lord, Lord Denham, but by my noble friend Lord Strabolgi. I realise the problems attendant on the replacing of Strowger. I am also conscious of, and have infinite confidence in, the capacity of the Post Office to come to the right decision. But I would stress that not only is there a need to come to the right decision about what form or type of exchange equipment should be accepted and developed, but also it is necessary that that decision should be seen to be right. The decision which the Post Office is called on to make in this matter will not only affect the Post Office, but have a tremendous influence on the development of this country in the whole economic field, because we depend so much on the quality and efficiency of our communications system. There is no need for me to develop the subject because it is a point of view which I have 1240 impressed on the Post Office, but I am quite sure of the need to make certain that the general public, and certainly Parliament, have some knowledge of the background to this problem and information about the facts which could cause the Post Office to come to whatever decision they have arrived at.
I am also pleased to see in Clause 2(2) that the Post Office are to be relieved of the £200 million debt—and I suppose this stems from a recognition of the mounting deficit of the postal services. I realise that this was necessary, but I should not look upon it as the normal way of maintaining the progress of the Post Office. I was very pleased to hear from the noble Lord, Lord Dedham, that the Government have no intention of allowing the postal services to fall into neglect. This is most important. We have talked so often about declining postal services that I believe this is having a prejudicial effect upon those men and women who have given lifelong service to the Post Office and who feel that they are now under constant threat. I am convinced, despite all the statements about declining postal services, that the demand for postal services is elastic. I believe that with efficient marketing there can be an enormous stimulation of the market for postal services.
I am also pleased that the Bill will make possible developments in regard to mechanisation. There is one problem here. The statement was made not long ago that there was likely to be complete mechanisation of letter sorting by 1980. The whole postal coding system was introduced for that purpose. I have a feeling—I do not know whether it is justified—that there has been sonic falling away in the progress of this mechanisation. I join with my noble friend in asking the question as to what is likely to be the programme in the future.
My Lords, I end my comments with a recognition of the fact that, by and large, in spite of all the justifiable criticism, the postal service is a good service and one that has immense potential. But the quality of its service, the rate of its development and the degree of its success in the future will depend largely, though not wholly, upon the ability to effect a really co-operative effort between labour and the unions, on the one hand, and 1241 Post Office management, on the other; supported, if I may say so, by the user, not only the organised user but the individual. Therefore I join with my noble friend in welcoming the Bill. I am glad of this opportunity to pay some tribute to the work of the Post Office and to express the hope that this Bill will provide an additional means of bringing about that degree of success which will mean greater service to the community.
§ 1.4 p.m.
§ VISCOUNT MASSEREENE AND FERRARD
My Lords, before my noble friend replies I should like to ask a question. Perhaps I did not understand what my noble friend said, but I thought he said that one of the difficulties of Post Office financing was the increasing competition from the telephone service. Surely the Post Office is the owner of the telephone service. I cannot understand how increasing competition from the telephone service can affect the finances of the Post Office. With regard to the personal service which the Post Office gives, I agree that where it exists it is good; but we must remember that these services have been cut down a great deal in the last few years. When the Post Office get this additional finance is there any chance of the personal services being improved to bring them up to the standard we used to have a few years ago? In the country areas we then had more collections.
My Lords, I do not want to add a note of Party politics in this debate, but it has always amazed me that, when the Post Office have a complete monopoly, they show a loss. I cannot imagine how they do not show a large profit. I am sure that if a private corporation had such a monopoly they would show quite a nice profit, and there would be no charge on the State.
§ 1.7 p.m.
§ LORD CAMOYS
My Lords, I agree with noble Lords opposite who hare spoken and support what they have said. I should like to ask the noble Lord, Lord Denham, if sufficient attention has been paid to forward planning. Let me give one example. Telephone calls from Reading to London have been subject to delays in the last 20 years owing to a shortage of lines. I know for a fact that there has been no liaison between 1242 the planning authority, the county council, and the telephone authority. At Caversham Park planning permission was given for 1,500 new houses, and it was fairly obvious that most of them, if not all, would want a telephone. But neither the manager nor the chief engineer in the Department was told about this. I think it would be found that the same thing occurs in other parts of the country and will occur again unless this liaison can be arranged.
§ 1.8 p.m.
§ LORD SOMERS
My Lords, before the noble Lord replies, I should like to put one or two points. The noble Lord, Lord Strabolgi, mentioned the fact that the Post Office is particularly dependent on manpower. This is nowhere more evident than in large post offices. We have quite a large one in Epsom, where I live, with 10 or 12 positions. It is quite an event to see more than three of them open at the same time, and there is generally a long queue at each one. This is a quite general situation. Is if not possible to have more automatic stamp machines; to have displayed a list of the various rates of postage, and possibly to have available more weighing machines, so that anybody can find out what their letters will cost and be able to stamp them without going to the counter?
One other thing I should like to say apropos of the telephone service. I have noticed that in places which are extremely noisy, such as terminal stations in London, many public telephones are being installed which are not enclosed, but merely have a hood over the top of them. In these circumstances, it is practically impossible to hear what your correspondent is saying. Is this to be a general practice? Would it not be possible to install the old-fashioned type of telephone booth so that one can shut out noise?
§ 1.10 p.m.
My Lords, I have listened with interest to the points made in this short debate. I do not want to take up too much of your Lordships' time, particularly on the last day of the Session when there is other business to follow. None the less, I should like to comment as best I can on some of the matters raised. If, having heard me, any 1243 noble Lord wishes to pursue further any point which has arisen, I am sure that my right honourable friend will be delighted to help him, as will the Chairman of the Post Office if the point concerns the day-to-day running of the business.
I should like first to say how very glad I was—and indeed I am sure all your Lordships will feel the same—to hear the noble Lord, Lord Peddie. It has been extremely helpful to have his contribution to-day and the House will be aware of the work being done in such a balanced way by the Post Office Users' National Council under his chairmanship. Your Lordships will recall that the value of this work was fully recognised in a recent Report of the Select Committee on nationalised industries.
The noble Lord, Lord Strabolgi, raised a number of points, and I will try to answer one or two of them fairly briefly. The noble Lord asked whether the capital investment was enough. Of course, it is for the Post Office to decide in the first place what level of investment is necessary and desirable, and it is for my right honourable friend to satisfy himself in his periodic reviews that scarce capital resources are being wisely allocated and used. Most of the postal programme is largely concerned with replacement and modernisation of old buildings, and some £185 million out of £252 million will be spent for this purpose over the next five years. While the Post Office has felt obliged to rephase some parts of the mechanisation programme to take account of the experience acquired so far in this field, a total of £44 million will be invested during the new quinquennium. No cuts have been imposed by the Government. I hope therefore that the staff will feel able to give their full co-operation to enabling this substantial programme to go ahead as planned.
The noble Lord asked whether the increased borrowing powers would enable the Post Office to maintain the same standards of services. So far as telecommunications are concerned, the Post Office investment programme allows for improvements in the network to eradicate congestion and to raise the standard of the service. I mentioned in my opening speech the plans for the extension of S.T.D. in the United Kingdom. 1244 The Post Office also plan to improve the service to the Continent. By 1978 International Subscriber Dialling, giving direct access to many countries in Europe and beyond, will be available from every important centre in the United Kingdom and to the majority of users, wherever they may be.
As to postal services, further capital expenditure is necessary to sustain existing services, and the extra borrowing envisaged in the Bill is needed to make this possible. In the short term the Post Office has said that it does not intend to introduce the service cuts that the Post Office Users' National Council advised against in January of this year. In the longer term it will clearly be necessary for the Post Office to strike a balance between the costs of providing services and the willingness of its customers to pay for them. But I can confirm to the noble Lord that Section 9 of the 1969 Post Office Act already places a duty on the Post Office to providesuch services for the conveyance of letters … as satisfy all reasonable demands for them … having, regard, inter alia, to efficiency and economy.The noble Lord asked what action was being taken to reduce the waiting list, now 220,000, and to reduce the waiting time. I mentioned in my opening speech that this problem was being tackled urgently. The Government have already approved increases in investment aimed at making further improvement in connections in the short and medium term. The Post Office is ordering additional equipment for immediate use and it has called in consultants to help it respond more quickly to changes in demand. It has also launched a series of bilateral talks with its principal suppliers in order to speed up the delivery of equipment and to work out a joint plan of action; and my right honourable friend is supporting these steps by a series of meetings with the industry in conjunction with the Department of Trade and Industry.
The noble Lord also mentioned the sharing of telephone lines. Sharing enables telephone service to be given to people who would otherwise find themselves on the waiting list for a telephone. If there were no sharing, almost 2 million present subscribers would be without telephone service. The reason for sharing is the same as for the waiting list— 1245 shortage of equipment and lines. One of the objects of the massive Post Office investment is to overcome this shortage so that the waiting list may no longer be a problem. When this happy state is reached it should no longer be necessary to make subscribers share. It is difficult to be precise as to when this situation may be reached, but the Post Office hope virtually to eliminate shared service by about the end of the decade. I appreciate, as I am sure your Lordships do also, the inconvenience of sharing a line, but this will be ended as soon as possible.
The noble Lord asked about the new electronically controlled exchange TXE 4. I understand that work on the development contract for 16 electronically controlled large local exchanges using reed relays, which the Post Office entered into with one of its suppliers in 1971, is going well. The Board are now reviewing progress and assessing results. After consulting industry the Post Office will decide whether or not it wishes to adopt these electronic exchanges for large-scale introduction into the telephone network. It will also consider the question of prematurely retiring the existing Strowger exchanges in order to replace them with the more modern equipment. Once the Post Office Board has reached its conclusions, it will be for my right honourable friend as hart of his statutory responsibility for approving their capital investment programme to consider their proposals so that the Government can take account of their implications for manufacturers' plans, for their export potential and for employment prospects. As my right honourable friend has made clear on a number of occasions, as soon as the final decision on TXE 4 is reached, steps will be taken promptly and fully to inform Parliament.
The noble Lord also mentioned the health, welfare and safety of Post Office workers. The Post Office has a first-class record of consultation and joint action with its staff on health, welfare and safety matters. It has recently launched a new occupational health service, and its last annual report shows that it has succeeded in reducing its industrial accident rate by 15 per cent. I appreciate the special problems created by the letter-bomb threat, though the noble Lord will not expect me to say in detail what measures are being taken 1246 against it. For the rest, I do not think the excellent Post Office record in the health and welfare sphere calls for a special Government inquiry at this time. I am confident that the Post Office will continue to seek improvements in consultations with its staff.
If I may turn to the Giro, the subject with which the noble Lord ended his speech, may I say, as my right honourable friend said during the Committee stage of this Bill in another place, that the Government are already Giro's largest single customer, and 12 Departments have already found it to their advantage to use Giro payment and transfer facilities. The noble Lord asked why telecommunications profits should not subsidise the postal side. In a situation where the telecommunications business requires finance for its capital expansion, my right honourable friend and the Post Office feel that it is only right that any profits should be ploughed back into the telecommunications side. May I here answer a question put by my noble friend, Lord Massereene and Ferrard, who asked how the telecommunications side could be a competitor of the Post Office when it is part of it. What I said in my opening speech was that the telecommunications part of the Post Office was a competitor of the postal part of the Post Office. I am sorry I did not make that clear.
My noble friend Lord Camoys stressed that there should be full liaison between planning authorities and the Post Office, so that new building does not find itself suddenly short of telecommunication services. I know that the Post Office will take note of what he has said about this matter. The noble Lord, Lord Somers, also raised one or two very interesting points. These, too, are, as I have said to your Lordships I am afraid all too frequently, matters for the day-to-day running of the Post Office; but I will make sure that they are brought to the attention of the people concerned. Indeed, I have suffered in the same way in some respects.
Any discussion of the Post Office's affairs always arouses interest in your Lordships' House. To-day we have been addressing ourselves to two particular aspects: the need to extend the Post Office borrowing powers and to write off 1247 some of its accumulated debts. These will put the Post Office in a better position to expand and improve its services to meet the needs of its customers. Noble Lords have acknowledged the need for these powers, and I hope therefore that the House will give the Bill a Second Reading.
§ On Question, Bill read 2a; Committee negatived.
§ Then, Standing Order No. 44 having been suspended (pursuant to Resolution of December 18), Bill read 3a, and passed.