POSTAL AND TELECOMMUNICATION SERVICES

HL Deb 20 April 1977 vol 382 cc133-76

2.57 p.m.

The Earl of KIMBERLEY rose to call attention to the organisation of the postal and telecommunication services; and to move for Papers. The noble Earl said: My Lords, I was very pleased to have won first prize in the raffle for the short debates. However, I have a certain number of misgivings, because the subject is very diverse and wide-ranging. I should like your Lordships, and particularly the noble Lord, Lord Winterbottom, to understand that I am not here in an aggressive or attacking mood. The object of the debate is in general to produce, I hope, some constructive suggestions to the Post Office.

It is a great pity, alas! that we do not have with us today the report of the Carter Commission, as was hoped would be the case before the last Recess. The noble Lord, Lord Winterbottom, kindly wrote to tell me that unfortunately the report would not be available.

The object of this debate is two-fold: first, to provide a cheap and efficient postal service and, secondly, to provide a cheap and efficient telecommunications system—because at the moment in this country I do not think we have either. Also at the moment, looking at the future, the prospects from the public's point of view do not appear too rosy for any chance of improvement in efficiency or cheapness. I hope that some of the criticisms and suggestions that are made today by other noble Lords as well as myself may lead to some general rethinking by the Post Office.

I start with the postal service. I am sure your Lordships are aware that the Post Office has a monopoly on letters but not on parcels or newspapers. In the Second Report of the Select Committee on Nationalised Industries, dated 3rd February 1976, it was stated that: …during the past 10 years the tariff for first-class letters had quadrupled, the quality and service had deteriorated and the traffic had declined". So the general picture is not very good.

Since 1969 the main service changes that have occurred are as follows: the downgrading of head post offices; the closure of sub-post offices; the closure of post offices on Saturday afternoons; the withdrawal of the third delivery in London, the withdrawal of bank holiday collections, the withdrawal of Saturday afternoon collections; the ending of Saturday afternoon parcel despatches; the widening of the service differentials between first-class and second-class mail; the withdrawal of Sunday collections—to which matter I shall return later—and the withdrawal of late evening collections. The Post Office claims that 93 per cent. of first-class letters are delivered by the following working day, but this means that about 700,000 first-class letters every day are still subject to delay.

I should now like to discuss the price factor. So far as one can ascertain, the only justification for the reduction in service would have been the holding of prices. But I am afraid that the record is unimpressive. In 1970, the cost was 5d for a 4 oz. first-class letter, which in metric terms was 2.08p for 113 grammes. But on 13th June this year, if the current proposals of the Post Office go ahead, it will cost 12p for 113 grammes, which is nearly six times the price in 1970. With parcels, it is the same sad story. In 1970, a kilo cost 3s. or 15p, and the proposal is that on 13th June it will be 13s. or 66p. During the same period, the retail price index will have risen only from 100 to about 254.

I now come to overseas mail and the proposed increases in printed paper rates, which will especially damage exports. The service which is mainly used is known as the direct agents bag, and this cost 16p for 2 lb. in February 1975. But, once again, it is proposed that in June there will be a charge of 40p for a kilo or 2¼ 1b., and adjusted for metrication this is an increase of just over 125 per cent. Over 50 per cent. of the output of publishers is exported and they have to compete with a subsidised American postal service. I have been given to understand that the postal business usually had a target of a 2 per cent. return on revenue, yet on overseas mail it is attempting a return of 6 per cent.

Private industry is subjected to the most detailed examination and scrutiny before any price increases can be approved. The Post Office seeks to justify its current proposals, by its own admission, in its statement to the POUNC's report of 5th April 1977, on the grounds of "the possibility that inflation will be higher than assumed." The Post Office is asking to be allowed to anticipate inflation—something which no private firm would be allowed to do. It went on to say that there is a "possibility that traffic levels will be lower than assumed." If we take the history of Post Office forecasts, we should be very uneasy. For instance, in 1975 it forecast, and was targeted to make, a loss of £70 million on posts, but in fact the loss turned out to be only £9 million. Therefore, the first- and second-class increases of about 20 per cent. in September 1975 were not necessary.

Again, in productivity the record is poor. Since 1970, the throughput per employee has fallen by 12½ per cent., which is equivalent to about 1p on an ordinary letter. It is also noteworthy that administrative staff increased from 5,800 in 1970 to 6,744 in 1975/76. This is a 16 per cent. increase, and if you add on the TV licence records staff it is a 28 per cent. increase. Concurrently, total traffic declined by 13 per cent., and the number of operative staff remained at about 160,000. The cost of this increase in administration works out at over £11 million—enough to restore Sunday and late evening collections. The annual report and accounts do not give administrative staff growth for telecommunications, but there is good reason to believe that their administrative record is far worse than that of posts.

I now come to postal customers—the commercial user, the charities and the general public—who have all lost faith in the postal service. The parcels service is being priced out of existence, as I have already said. Only 160 million parcels were carried last year, compared with over 240 million in the early sixties. The reduction of the first letter weight step to 50 grammes, with so little notice, will affect the direct mail industry, which in turn will damage the Post Office itself. Delays in mechanisation have been such that few expect it ever to be introduced. The general pattern of postal services has been one where all users are asked to pay more and more for less and less, and are subjected to bewildering policies. Many users would like to make more use of the post, but they are often prevented from so doing by excessive prices and by continual uncertainty. What users need is an open approach from the Post Office, under which it makes public its plans and discusses them with all sections of customers.

I should like to give your Lordships one example of the Post Office's heavy-handedness. At Christmastime, just over a year ago, because of the cost of posting Christmas cards, a vicar advertised to his flock that local Christmas cards could be collected and delivered through his church. But he was informed very sharply by the local postmaster that he was infringing the Post Office's monopoly, and was therefore breaking the law. That is reported in Hansard for the Commons of 4th February, 1976, at col. 1211.

To return to Sunday collections, not long ago the noble Lord, Lord Melchett, replied to a question of mine that the Post Office has said that it costs eight times more to collect mail on a Sunday than on a Saturday. I can well understand that, with overtime and this, that and the other, it might cost two, three or perhaps four times as much, but I fail to understand—and nobody can explain the reason to me—why it should cost eight times as much. Maybe the noble Lord, Lord Winterbottom, can inform us of the reason when he replies.

I now come to a commercial which was done by Tommy Steele and shown on ITV the other day. I am not anti-Tommy Steele, but it was a long and very expensive commercial put out by the Post Office, saying "Write and post more letters". Do we need to have this kind of thing, to tell us what to do with the Post Office? It was an extremely expensive commercial to make, and it will be extremely expensive to pay for every time it is shown on ITV. If we are to have advertisements, why cannot the Post Office advertise where we can post our letters on a Sunday, because there are some places where one can do that, although I have not been able to find out where they are. There are also some rural areas where there are two deliveries a day, one for letters and one for parcels. Again, I do not know where they are; but surely two deliveries in a rural area cannot be economical.

I should now like to turn to the telecommunications side, on which I know the noble Lord, Lord Ferrier, and probably the noble Lord, Lord Redesdale, are to speak. In the past, I have complained in your Lordships' House about the fact that when the STD does not work, and you have to get the operator, you are then charged the full operator rate. Why should we have to pay for this when the equipment is faulty? When the noble Lord, Lord Beswick, was in the "hot seat", he said in answer to a question on this point that the operators have to be paid. But they have to be paid whether they are getting calls or reading a book. A spokesman from the Department of Industry said to me the other day that if the full operator rate was not charged the public would cheat. To me, this seems a non sequitur. How would they cheat, if they were charged for a call at the normal STD rate? Surely nobody is going to ring up an operator by dialling 100 and wait for an answer if it is possible to get the number through STD!

On 16th March last, the noble Lord, Lord Ferrier, said that £45 for installing a telephone is far too high, and in many instances causes great hardship to the old, the handicapped and ordinary people who live in sparsely populated areas. How right he was! Surely it would be better to pay a smaller installation fee and thereby perhaps generate more business.

Then there is the rental payable in advance. Perhaps it would be a good idea if every subscriber had to use "X" units, and to pay the rental even if he did not use them. But once he had used that amount of units the rental could be waived. Surely this would encourage more use of the telephone. I believe that only 50 per cent. of the households of' this country have telephones; so if we could increase substantially the number of telephones the whole service should, in theory at any rate, become cheaper. As there seems to be little likelihood of the postal service becoming cheaper and every likelihood of fewer facilities being provided, surely it must be right to try to increase the number of telephones. On 16th March, at col. 128 of Hansard, it was implied in your Lordships' House that the Post Office exercised its discretion on telephone installation charges. The noble Lord, Lord Winterbottom, was unable then to give any information on how often this discretion is exercised. Perhaps the noble Lord could do so today.

As I have said, it is most sad that the Carter Committee is not with us today. However, I have heard a rumour that it has suggested that the postal and the telecommunication services should be separate entities. If the rumour is correct, it is probably a good idea, particularly as one service makes a loss while the other makes a profit and at the moment neither helps the other. However, I should like to say one word of warning. If the services are to be split, there should be no increase in the aggregate staff employed, as occurred when the Corporation was set up in 1969. An enormous increase in staff took place then.

Before I finish, may I give one or two examples of money being frittered away, perhaps unnecessarily. At the Old Bailey the other day a witness was asked by the judge: "What is your profession?" He replied, "I am a Post Office delayer". The judge asked him what that meant, and he said, "My job is to scrutinise second class mail to make certain that it does not get delivered too quickly". Very often I have likened our country to Alice in Wonderland but that, I think is Through the Looking Glass. There is another perhaps unnecessary expense. If you watch commercial television you are likely to see a "commercial" of a bird sitting on a telephone wire saying "Use the telephone on Saturdays and Sundays" when you can use it at a cheaper rate. Most people who have a telephone realise that. Again, do we have to pay for this unnecessary advertising?

I have nearly finished and I am sure that your Lordships will be delighted to hear me say so. However, I should like to mention one other matter about which I feel the general public and all noble Lords feel very strongly. Why should the Post Office worker, or a small group of workers, have the right to dictate to us whether we may have our mail delivered to South Africa—and also whether we may have our mail delivered to a film processing firm in London because a small group of workers disagreed with the way that firm was being run? The Post Office has a monopoly, and I maintain that thereby it has placed upon it a responsibility as well as a special obligation to deliver the mail.

Perhaps I may now make a few suggestions which I hope will be constructive. First, why not advertise where the Sunday service postal collection exists already? Why cannot post offices accept bulk postings on Sundays? They will do so in one area and if the noble Lord, Lord Winterbottom, would like to have details I will gladly give them to him afterwards. Inter-city deliveries are profitable, whereas deliveries in rural and isolated areas are not. However, I believe that Scotland has very successfully started the practice of delivering local mail by local bus services. Could not this system be adopted in the rural areas of England? Perhaps the parcel delivery system could be improved by amalgamating the parcel delivery service of British Rail National Carriers and British Road Services.

On 31st March the noble Lord, Lord Winterbottom, said: Do we want a commercial undertaking or a social service, for at the moment we have neither". I should like to read one sentence out of the Post Office Act 1969. It comes from Section 9(1): It shall be the duty of the Post Office (consistently with any directions given to it under the following provisions of this Part of this Act) so to exercise its powers as to meet the social, industrial and commercial needs of the British Islands in regard to matters that are subserved by those powers and, in particular, to provide throughout those Islands (save in so far as the provision thereof is, in its opinion, impracticable or not reasonably practicable) such services for the conveyance of letters and such telephone services as satisfy all reasonable demands for them". We live in one of the finest Welfare States in the entire world. I humbly suggest to your Lordships that we should have a social service from the Post Office which should be viably run for the benefit of all. My Lords, need I say more? I beg to move for Papers.

3.17 p.m.

Lord REDESDALE

My Lords, we are all most grateful to the noble Earl, Lord Kimberley, for his extremely able and very useful contribution to the debate, which affords us with a wonderful opportunity to discuss the Post Office, a subject close to our hearts. In fact, it is a subject which we all love to hate. I should at the outset declare an interest. I am President of the British Direct Marketing Association and we are very much concerned with mail. Therefore I have had a certain amount of input from members. Over the years, the Post Office have been very courteous to me and have shown me both the telecommunication and the postal side. If, therefore, in taking up the last point made by the noble Earl about the service which the Post Office has to provide under the 1969 Act I sound rather astringent, I could, having these friends, hide behind the cartoon of my family which appeared recently in The Times, which said that some of my best friends are Mitfords.

The Post Office is enormous. In some ways, it is as large as China. It is the largest employer of labour and, because it is so large, it has, unfortunately, other similarities with China. It tends to hide behind its inscrutable Great Wall of non-accountability, an area that I should like to touch upon later. One aspect of this non-accountability comes up right at the start. It stems from a number of questions which have been asked from these Benches over the last year on the sore and sad subject of Sunday collections. The Post Office said that there would be a one year experimental period, which should end on 2nd May. However, it is not very experimental, because the Post Office has already made up its mind, as we know only too well, that on 2nd May it is not going to return to Sunday collections. This is very sad, because everybody who was consulted said that we need Sunday collections. The Post Office hides behind the fact that it was not a very large service. It is quite true that the service did not have so much of the business mail, but it handled an enormous quantity of personal mail and this fact has been totally disregarded.

I feel your Lordships should have your attention drawn to an article which appeared in the Observer on 17th April. Readers were asked for the actual areas in which hardship occurred. I will not weary your Lordships because it is already in print, but there is sufficient material there to show that hardship is being caused to a large number of people because of the withdrawal of the Sunday collection service.

Another aspect is the so-called planned cut deliveries. In fact, Mr. Tom Jackson raised the point and I rather agreed with his description of the Post Office when he said: This is all part of the usual Post Office policy of giving less and less service to the community at higher and higher price". That is a serious charge, but I am afraid that we are in fact getting less and less service. I said that I was going to be astringent and perhaps I sound far too critical, but we used to have by far the best postal service in the world. That is absolutely unquestionable, and I will say that it is still a very good service compared with that in a lot of countries, but, accepting that point, I feel that we should not say that because it is better therefore it must decline from now on. Let us try to maintain the service that we had in the "good old days" when the Post Office was part of the Government under a Postmaster-General.

Many aspects of Sunday collections have been referred to. Mr. Alex Currall, who is a most charming and able man, answered questions put by my noble friend Lady Young about Sunday collections, and all I can say is that his four-page letter tried to set out the facts but it did not really cover the situation. It was a sort of apologia for it, and it did not give any real answers. My charge is that the philosophy of the Post Office is wrong. It does not accept bulk buying on the postal side because it claims that it costs more, but this is a question of approach. On the telecommunications side, there is a degree of acceptance of bulk buying but at the same time the charges are exorbitant.

In a speech which I made in your Lordships' House on 16th March, during the very useful debate which was initiated by the noble Lord, Lord Ferrier, I referred to the question of charges and that subject was covered quite fully, so I will not weary your Lordships with it now. However, the noble Earl has spoken of the incentive to use more of the services, and although our installation charge and our rental charges are not so exorbitant, we do have to pay a lot more for local calls. So we are caught at the other end; there is a fairly hefty "Catch 22" in regard to the charges.

We have heard a lot about Carter, and we have waited with great enthusiasm for the Carter report, but it is always just around the corner. It would have been useful if we could have had the Carter report today, but we must look forward to the pleasure of its arrival later. However, there is one aspect on which I should like to ask the noble Lord, Lord Winterbottom, a question. The Post Office has made a submission and supplied a business plan. This has not yet been published although parts have either been leaked or in some way have appeared in the Press. I do not want to be taken up on that but certain information has appeared in the Press and therefore I feel that we should see the Post Office submission in this regard.

Lord WINTERBOTTOM

My Lords, the noble Lord has made a most important point and I want to get it absolutely right. Was the noble Lord saying that this House should have a view of the Post Office submission prior to the appearance of the Carter report?

Lord REDESDALE

Yes, my Lords. The reason why I say that is that some information has already appeared in the Press. In my view, that is rather a mistake and therefore it would be of value to us all to see the whole thing now rather than just getting little bits.

Lord WINTERBOTTOM

Because of the leakage, my Lords?

Lord REDESDALE

That is correct, my Lords. I am only too aware that this is a short debate and I do not want to take up too big a share of the time that is available, so I will go on to the question of cost. The noble Earl spoke of second-class deliveries and the interesting occupation of being a Post Office delayer, referred to at the Old Bailey. I must confess that when the Old Bailey was referred to I thought it was a reference to the last Postmaster-General, but in fact I want to raise a question on what he said on the whole question of accountability during the debates on the Bill which later became the Post Office Act 1969. On the second-class mail we now have a ½p rise, which is very considerable. The increase is to be ½p on both first-class and second-class mail. The answer given by the Post Office is that this is only a 6 per cent. increase on first-class and an 8 per cent. increase on second-class mail. I feel that here the Post Office, as usual, is being a little naughty. I can cite many examples of where it tends to hide behind things or perhaps does not disclose everything. This increase is allied with a reduction in the maximum weight from 60 grammes to 50 grammes. If your letter happens to be on the heavy side—and perhaps some of us are rather more prolific writers; I do not know—and is above 50 grammes you will have to pay 12½p, instead of 8½p, which means in fact an increase on that small segment of about 46 per cent., not the 6 per cent. or 8 per cent. that we have heard about. I do not think the increase would have mattered so much if it had not reduced the weight. I should be grateful if the noble Lord would consider that point.

I have said previously that I wanted to raise the whole problem of accountability. Just to go back on the history of this, it was raised by Mr. Stonehouse in 1969 during the passage of the Post Office Bill. He accepted that the change to a Corporation would mean that the Post Office was not as answerable on the day-to-day items as it had been in the past. It was glossed over by Mr. Stonehouse and by the noble Lord, Lord Beswick, in this House when they said that in fact one could always get an answer one way or the other from the local postmaster or by various Parliamentary devices. But we have had experience of the noble Lord, Lord Melchett, dancing around on this subject and hiding behind the fact that he is not actually responsible for the day-to-day running of the Post Office. That is quite true—I am not saying that the noble Lord is wrong—but it is rather a pity because we cannot actually bring our guns to bear on somebody on the other side. We have to rely on these other, rather more diffuse methods of getting information.

I have long waited for the occasion when I could actually refer to something which had been said by my noble cousin Lord Denham. In a Second Reading debate in your Lordships' House on 12th June 1969 he made the point that we would lose out very considerably on our ability to gain information on the Post Office. As a result of that the service has slipped.

Being very conscious of the passing of time, I should like to turn to one other aspect. We have a Post Office Users' National Council, chaired very ably by the noble Lord, Lord Peddie. The noble Lord, will not, I hope, instantly rise to his feet when I say that, although they do a good job, they have no teeth. I will say immediately that I know that the noble Lord has teeth, because about 10 years ago on a police debate he bit me very firmly. So I would not say he has no teeth and I would not say that he does not do a very strong job himself. But they have very few statutory teeth and very little actual power. On a number of occasions, when they have spoken on the subject of price or something else, they have not had the power to do anything about it; they can only recommend. It is a great pity. We hear about representation. We hear about worker representation on the Post Office Board; well and good. Bees do it for years in hives. Fine. But what about the users. I think the users ought to have considerable representation on the Post Office Board. Only in that way could we get something done. POUNC does its very best, but it has a large number of laymen on it. I feel that there ought to be many more people on the Board who are concerned in the day-to-day effects of the Post Office on business, whether it be telecoms or whether it be postal. I hope the noble Lord will give some consideration to this point.

My Lords, as I said earlier, I know that we have a good service. In fact, it is not as good as we should like it to be. Other countries complain about their services and the delays in services. In Canada, where they have just had a two cents rise in costs, it is said that the two cents is for storage. Perhaps our service is getting slower, but it is up to us to chase the Post Office to provide improved service.

3.32 p.m.

Lord WALL

My Lords, may I also thank the noble Earl, Lord Kimberley, for this opportunity of a preliminary canter down the Carter course. Like others, I look forward very much to its report, especially on the performance of the Post Office since it was set up in 1969 in corporation form. I have a special interest in this; it is now more than 10 years ago since, at the request of the Government, I was loaned by my firm to the Post Office for two years to see whether I could do anything to help in the preparations for the eventual translation of the Post Office, after 300 years as a Government Department, into a public corporation. Two years is far too short a time to learn a great deal about a large organisation, but I think I came to understand a few of its problems. After nearly nine years I am very much out of touch, but, unlike the noble Earl, I think that in all the circumstances the total performance of the Post Office Corporation since inception has been most creditable. I will support that statement with a few facts.

Taking telecommunications, it has grown rapidly; the number of telephones has grown in the last nine years by 60 per cent. and the number of calls by 100 per cent., with an increase in staff of only 5 per cent. Much progress has been made with new technology, for example, digital switching and wave guides, and with modernisation. STD is almost complete, and the call failure rate has been cut in half in the last nine years. The less fortunate postal service has certainly seen its services declining, but its standing as a service as compared with other countries has not diminished.

Turning to financial matters, the Post Office has made profits in four of the last seven years. The three years in which losses were made were due to Government insistence on price restraints. The recent turnround in profits in 1975/76 was, of course, largely due to higher prices, but also due in part to internal savings of no less than £80 million. Compared with other nationalised industries, I think the Post Office's record is good, and I shall be interested to see whether or not Carter shares that view.

I should now like to touch very briefly on some of the management problems of the Post Office—size, diversity, monopoly and relationships. First, size. The Post Office is a very large organisation measured by any standard. I remember that 10 years ago I estimated that in most respects the Post Office was larger than the United States Steel Corporation—one of the world's industrial giants—and since then it has grown faster than US Steel. The postal side offers a graphic illustration of size related to performance, as the noble Earl has said. Ten years ago the Post Office was handling 35 million letters a day. Taking a reasonable figure of performance of 90 to 95 per cent., this means that every day some 2 million letters can give cause for complaint.

It is now generally recognised that size poses serious problems of management and organisation, and the classical methods of tackling these are by the maximum delegation of authority and responsibility, the hiving off of units before they get too big, by cost and profit centres to measure performance, and by periodic reviews of the total organisation. Unfortunately, these solutions are not easily available to the Post Office. It has to provide services at uniform prices throughout the United Kingdom, irrespective of actual cost. Wages are also fixed on a national basis irrespective of local supply and demand. Thus any kind of real delegation is almost impossible. Ten years ago the Post Office separated the organisation into four self-contained businesses and separated posts and telecommunications within the regional organisation. We looked into profit centres, but so many arbitrary cost allocations had to be made that the whole exercise made no sense, apart from Scotland. So the Post Office has to face its size problems with a much more limited armoury than is available to private enterprise.

Diversity presents the usual problems of handling four quite different businesses, but I will touch only on posts and telecommunications. These two businesses differ fundamentally. Posts is a public service, telecommunications a public utility. Posts is labour intensive, telecommunications capital intensive. Posts is contracting—the volume now is about what it was 40 years ago; telecommunications is expanding—it is doubling itself roughly every eight years. Posts can never be run commercially, telecommunications must be run commercially. So the two businesses have nothing in common except their history. Is it not time, therefore, that this was recognised? I personally am now convinced that these two vast operations should be completely separated into two corporations.

Turning to current criticisms, it is, of course, the posts that come under the greatest fire. While posts must remain a large service demanding large resources, the underlying trend is contraction. Its technologically based competitors in personal communications, such as telephone, telex, teletext and facsimile, have so much to offer. Seventy-five per cent. of its costs are labour, and many of the hours worked are what these days are called "unsocial". Who really wants to get up at 5.30 in the morning for six days a week all the year round in all weathers?

The question then is how, against this adverse background, we can maintain, as we must, an acceptable postal service. Let us not delude ourselves into believing that we can have this without rising prices and without changes in services. Some people will say that we should subsidise the losses. This, surely, is the worst solution. When subsidies come in through the front door, efficiency goes out through the back door. Once you are accustomed to working in the red, the size of the red figure soon ceases to matter. But I accept that to set the postal services the objective of operating without subsidy is to set a most challenging task, but not an impossible task. If I had time I would spell out some possibilities, but I will move on to a much more easy picture, that of telecommunications.

Here the outlook is very much brighter. We have a fast growing industry—as I said, doubling itself every eight years—with exciting technological developments, especially as telecoms converge with computers, broadcasting and information services, all with increasing international connections. Here is a highly capital intensive business which can offer a fascinating future for its staff and can meet higher wage costs by increasing productivity. The contrast with posts could not be more marked. It seems to me, though, that the real issue for telecommunications is to make sure that they can achieve the high level of profits which is essential to provide full depreciation on assets at replacement values—and the historic values are already £5,000 million—especially with the accelerating obsolescence of Strowger equipment; to pay interest on borrowing and to provide for a substantial part of the new money needed to finance the vast future investment programme, which will soon approach £1,000 million a year. The target of 6 per cent. set last December by the Government looks low in relation to the expected inflation and to the 9½ per cent. to 10 per cent. which is permitted in North America. The Post Office is well on course to meet the target of 6 per cent. and its primary aim must be to ensure that the telecommunications part of the Post Office is run on sound commercial lines with the minimum of political interference.

I turn to the question of the Post Office monopoly. Every time the Post Office comes under fire some suggest that the monopoly should be changed. This defeats me. In every country of the world the postal service is a State monopoly, and that includes North America. In every country of the world telephones are a monopoly. In most countries they are a State monopoly but in North America they are private monopolies, but none the less monopolies. The real differences between the private monopolies of North America and the State monopolies elsewhere are two-fold. The first is the system of regulation; the second is the fact that in North America the telephone monopolies also manufacture most of their own equipment. I shall deal with this point later, but I should like to deal with the question of regulation as here we can learn something from North America.

The private telephone monopolies of the United States are regulated by the Federal Communications Commission. The FCC is a really tough regulator. No telephone company can change its prices without FCC approval. Likewise, both the amount and the terms of new money need its approval. It also looks into complaints against the private monopolies and on at least two occasions in the last few years has taken important decisions which were far from welcome to the telephone companies. The beauty of the American system is that regulation is concentrated, whereas in this country it is diffused—stretching from the Cabinet, through the Department of Industry and the Price Commission to the users' organisation. Our system is far too subject to political forces.

I turn to relationships. I have just touched on the relations of the Post Office with the Government. I think they need improving. In fact, I believe that the whole system of regulation needs looking at again. I shall not venture into the area of the relations of the Post Office with its customers because time is too short. On the other hand, I want to say a little about relations with staff and suppliers. The Post Office probably has the most developed Whitley system in the public sector. Although I, personally, have doubts about this system for a commercial business, I shall not pursue the argument now.

However, I am concerned about the recently announced new structure of the Post Office Corporation Board. To have taken this major decision before the Carter report is published and the future of Bullock has been decided looks unwise as well as discourteous. I am certainly not against having trade unionists or workers on the Post Office Board, but I believe that the Board needs some really top-rate business people as well. This hasty decision can hardly help.

The relations of the Post Office with its suppliers have recently been in the news. We are told that they are not close enough; there is conflict between the two sides. Yet it is barely 10 years since the Post Office was severely criticised both by Government and by Parliament for continuing the former Post Office rings—they were too close. We were told to break them up. It looks at times as though the Post Office can never win—every time it comes round the last bend there is someone busy removing the winning post, and that is usually the Government. However, this problem badly needs more attention.

The American private telephone companies are the main suppliers of all kinds of telephone equipment. Western Electric, for example, is a very important and profitable part of the great and successful ITT empire. In the light of American experience, and, for that matter, Swedish and Japanese experience, we must take a new look at the organisation which will bring together the Post Office telecommunications section and its suppliers. Of course there are great problems. For example, unlike America, our telephone suppliers are all part of large electrical and electronic businesses. We must find a better answer if we are to have both a well run and successful telephone communications monopoly and a successful group of telecommunication suppliers, especially with the great export opportunities that exist in this field. At least we must devise an organisation to deal with product development—indeed, with research and development in general—and with exports.

It has been estimated in America that it takes some 15,000 man years to develop a new telecommunications system, and I suppose that the cost must be £150 million. As is the case with computers, we as a nation can afford to do this only once every 10 years, so we must get it right. Sir William Ryland has expressed some interesting personal thoughts on this problem of relationships with suppliers and I hope that they will receive urgent examination.

I have run over my time, my Lords, although I know that I have left a good deal unsaid. In conclusion, may I hope for more understanding of the problems of the Post Office and the great efforts it is making to overcome them. It is time that there was some praise as well as criticism. Perhaps the Carter report will provide the opportunity. Some years ago in the United States the FCC took a major decision in what is known as the "Carterphone case". It stands as a milestone in American telecommunications history. Let us hope that the Carter report will provide a similar milestone in the history of our great Post Office.

3.46 p.m.

Lord ALPORT

My Lords, I intervene only briefly to express a point of view which I have voiced in your Lordships' House on a previous occasion. I am grateful to the noble Earl, Lord Kimberley, for giving me an opportunity to do so. My theme is very like that of the noble Lord, Lord Wall, but there is one fundamental difference. The noble Earl, Lord Kimberley, has given a long catalogue of the changes in the standard of services provided by the Post Office. I am sure he will realise, as the House will realise, that much of this is due to the fact that the Post Office is caught between the Scylla of inflation in a labour-intensive industry and the Charybdis of the financial disciplines of a nationalised corporation. I, personally, regret that the whole problem of the Post Office has been referred to a Commission, although I hope that when the Carter Commission reports it will be able to give some advice as to the very obvious changes which are necessary in the whole establishment of the Post Office at present.

The major change—this was touched on by the noble Lord, Lord Wall—has been obvious to anyone who has been interested in and sympathetic to the problems of the Post Office ever since it was turned into a nationalised corporation. The fact of the matter is that to regard the postal service as a nationalised industry has always been nonsense. To combine posts and telephones into one corporation has always been wrong. As the noble Earl and my noble friend Lord Redesdale said, the Post Office is a service. It is important to remember that it is not only a service that is important to the individual consumers and the mail order business, but it is an essential part of the administrative structure of the Government of this country. It would not be possible to run this country without it. It is true that it would not be possible to carry on normal trade and commerce, even at a relatively low level, without it. That is not true of the telephone service. We could govern, we could collect taxes and rates, we could operate in industry and commerce and conduct trade without the telephone, but not without the Post Office. Nor for that matter would the Government he able to carry out as effectively as they do at present, or without great additional overheads, the administration of the social service, national savings and pensions.

I repeat that the Post Office is not an industry; it is a public service. Public services are a very different proposition from the financial point of view from that of a nationalised industry. As the noble Lord, Lord Wall, said, the postal services are labour-intensive and dependent upon the 300.000 men and women who work for them. The telephone industry is technologically sophisticated and increasingly automated. The management problems, development, labour relations, recruitment and investment policy are totally different as between the telephone industry and the postal services. Moreover they are not complementary. The fact that if one has a telephone does not mean that there is no need to have a postal delivery; but the converse is not true.

The noble Earl, Lord Kimberley, said that 50 per cent. of the households in this country do not have telephones, but everybody, or the vast majority, has a postal address. In fact, a postal delivery is a necessity, and it is a necessity to every household in the country. All this has been recognised for at least the last 100 years by the equalisation of charges in the postal service, but that is not true of the telephone service or telephone industry.

Finally, there was in the old Post Office, as the noble Lord, Lord Wall, will know, a special esprit de corps among those who worked in it. It was the oldest Department of the State; older than the Army, older than the Navy, older, if I may add to that, the Excise, and certainly the police. As such it attracted a particular type of employee. There were, and still are to my knowledge, old Post Office families who give to the Post Office the kind of devoted service which the military families or the naval families give to their services. There was, and I hope and believe there still is, a sense of loyalty and co-operation between management and staff in the Post Office which is of great importance to the organisation and the wellbeing of the Post Office as a whole.

I do not say for one moment that there is not loyalty and co-operation in the telephone industry, but the relations are different. I have no doubt in my own mind, and I say it with all the confidence that I can muster, that the only way in which this country will get the standard of postal service to which we were accustomed when the Post Office was a Department of State is by making the Post Office a Department of State again. By all means let the telephone industry remain a nationalised corporation. I do not agree with the noble Lord, Lord Wall, in saying that there should be two corporations. I say that the postal services, the Post Office, should again be under the Postmaster General; that it should be regarded as part of the Government service just as the police are part of the public services, or the Army or the defence services, or what you will.

I am quite certain that if the country wants the standard of postal service which the noble Earl, Lord Kimberley, has mentioned, then it has to be administered according to the financial disciplines of the Civil Service and not of a nationalised industry. So far as the telephones are concerned, that is something going from strength to strength as technological change takes place. That is fine. Let it take the challenge of the ordinary industrial world and make good at that, but let us return a great public service, an historic public service, which is represented by the postal services of this country, back to where they belong as part of the Government service of the United Kingdom.

3.53 p.m.

Lord FERRIER

My Lords, we are all grateful to the noble Earl for introducing this debate; but as it has proceeded, I have been more and more impressed by the speech of the noble Lord, Lord Alport, and by the powerful speech by the noble Lord, Lord Wall, of how important it is that we must wait for Carter and for Professor Posner too. There are great issues at stake, and I feel that as we have so to wait your Lordships will forgive me if, in my approach to today's debate, I may be almost kindergarten in my simplicity.

The other day I introduced a debate on an Unstarred Question and I can therefore be brief. Since it was an Unstarred Question I could not reply following Lord Winterbottom's answer, but I have since had communications of all sorts, some by telephone, about what we said. These subsequent exchanges have emphasised one or two extensions of the points I raised, and I have had a word with the noble Lord, Lord Winterbottom, on the subject.

First, there is the question of reducing the cost of new installations. This is obviously a matter of great importance to the public, particularly to the old, the handicapped, and people in remote areas. In the course of that debate the noble Lord, Lord Winterbottom, said that the Post Office has given regional directors discretion to consider reducing installation charges where there are "sound reasons for reducing connection charges." Those were his words. My noble friend Lord Kinnoull took him up on this. I only mention it because I wonder whether, when he replies, the noble Lord can tell us that the Post Office is following this up with vigour. It seems to me, living as I do in a country area, that it may well be that underloaded rural exchanges may constitute sound reasons for careful consideration of this business promotion. After all, to add to the connections is good business from the Post Office point of view. At the same time we know—and I think I am right—that one of the troubles today is that there are large stocks of equipment which if not obsolete is at least obsolescent. If the Post Office could improve the rural services where there are old-fashioned exchanges which are going to have to be remodelled as time goes on, this might be a sales gimmick and a way of disposing of such stocks of almost obsolescent material.

The fact of a telephone being a potential lifeline, which was the word we used in the debate the other day, is particularly important, as I said, in remote areas where contacts with centres of population are becoming more and more difficult as the cost of motoring increases. With the increase in the road fund licence and the cost of petrol, and so on, the business of getting a letter to the post if you live in a remote area makes postage more and more expensive.

That brings me back to the suggestion for which I have received much encouragement, that there might be a return to the system of allowing so many free calls or free units per connection. The noble Earl touched on this matter and produced an alternative suggestion which would go the same way. I hope that the postal authorities will give consideration to this matter where, by a judicious use of such a gimmick, as it may well be described, we can increase the usage of the telephone system and improve the convenience to the consumers.

To return to the cost of motoring, this can be a heavy surcharge on the posting of a letter when the nearest letter box is at a distance and inward letters are infrequent. Where I live we are well served by a local post office and, like most of your Lordships, I get letters by every post. Twice a day we get a delivery and that means that the postman can take away, as he does, letters which are ready to go. Therefore, I am not complaining for myself, but it is not everybody who has a stream of letters and a visit from the postman twice a day anyway.

One of my informants tells me that a recent programme on Radio Forth, which is the Edinburgh local radio—I did not hear this programme—made reference to second-class letters not being delivered by second deliveries. The suggestion was made by, I believe, two postmen that they regard the second-class mail as not of great importance. I should like to know whether it is a fact that postmen, particularly where they are dealing with high rise flats, regard a second-class letter as a second delivery job, and what I believe they call a "bumper", or some such word, and because it is a second-class letter they pop it back in the bag for first delivery next day.

Regarding the weekend service, I return to what I said about the overnight letter telegram, which costs 50p plus 4p a word, plus the address at 4p a word. Where I live the last weekend collection, at the East Linton post office, is at 12 noon on Saturday, so it is reasonably possible to get a Saturday letter away to reach London on Monday. Failing that, and as is more common, the last collection on Saturday is at an earlier time, which may mean that the overnight letter telegram service is particularly useful, even if it is quite an expensive way out.

I therefore repeat my suggestion that in view of the paucity of collections over the weekend, the Post Office might consider waiving the 50p impost on Saturdays and Sundays. I appreciate that such a step would be dependent on pressure on the "Dial 100" staff over the weekend. Talking of the overnight letter service, another interesting line which I did not mention to the noble Lord, even when we met the other day, came from a contact of mine who pointed out that an overnight letter telegram is a much more legally binding message than a telephone call, which may be misunderstood or disputed. This could be used as an important advertising point if the Post Office wished to push it.

Those are the main observations I wished to make arising out of what has been said by other noble Lords. As I said at the outset, we must wait before we can tackle vital decisions such as those Lord Alport suggested until after Carter and the other considerations which we hope will soon be before us. Before concluding, however, there are a few small additional points I would make. First, is the Post Office properly remunerated for all the services it renders to the public? I refer to departments other than the post and telegraph services such as Giro, old age pensions and the issue of television and road fund licences. Is the Post Office properly compensated for this work and is any consideration given to those who go into small post offices to buy a stamp and have to wait for I do not know how long while a few old age pensioners draw their money?

Secondly, another contact of mine has drawn attention to the extraordinary effect of the high cost of postage. I suppose the Post Office knows what it is doing, but certainly many small businesses have had to stop sending small articles because of the high cost of postage. I am thinking of a barber shop which used to deal in hair dressings but which has stopped doing so because of the cost of postage. I do not see any solution to that kind of difficulty. Thirdly, is there any possibility of getting the Post Office—this might be an advertising gimmick—to produce 50 or 100 gramme weights which we could use on our letter balances? I understand that it is impossible to obtain them from any private undertaking and I should be glad to hear of any being made available.

As many noble Lords will be aware, I spent many years in India. One of the thrills there is to consider how the Post Office and postmen deliver letters at all. It is quite possible from Bombay to write to a friend up country giving an address as Lamp-post number so-and-so, Queens Road— because the sender sleeps under that lamp-post every night—and somehow one receives a letter in reply.

4.5 p.m.

Lord PLATT

My Lords, while there are a number of points I wish to make, I shall be brief, and I wish at the outset to apologise deeply to the House because I had a committee meeting to attend and was not able to be here for the whole of the debate. I was able to hear the rather devastating remarks of the noble Earl, Lord Kimberley, to whose speech I listened with great interest, but I fear that I did not hear the other speakers. I shall be brief, only to be sure that I am not repeating, to the boredom of the House, points that others have made.

I wish to say something in favour of the Post Office. My experience is that the first-class mail is an absolutely excellent service, particularly when one considers the millions of letters that have to be sorted, say, this afternoon and this evening for delivery tomorrow morning. I find it an excellent service when I think of such letters that will be posted today and will be delivered at my house on the outskirts by first post tomorrow morning. It is a reliable and, on the whole, excellent service, and I wish to put that on the record.

Many letters that are said to be delivered late—it is said that some have taken four days to pass between Regent Street and Trafalgar Square—are late because of the fault of the senders and not of the Post Office. If one dates letter arrivals by looking at the postmark and not the date of the letter one will often find that the letter is dated, say, the 17th but was not in fact posted until the 21st, yet the Post Office is blamed for the delay. Most of those who complain about the Post Office are the sort of people whom I would never trust to post a letter for me. I think a great deal of this difficulty is also due to the employment of junior typists who, while they may be excellent at their work, are not senior enough to put to the chief, "Do you realise you have not yet signed Thursday's letters?" Much of the blame that is put on the Post Office can be laid on the posters.

I have frequently met people at dinners or meetings who have asked, "By the way, Platt, have you received my letter?" When I have asked, "What letter?" the reply has frequently been, "Perhaps I haven't signed it yet." I am sure that others more intelligent on the subject than I have spoken on this issue. I would only ask whether it is particularly serious if the Post Office is losing money on its postal services when it is making a handsome profit on its telecommunications. If it were a private industry would it matter so much if it was losing on some of its products but making handsome profits on others?

4.9 p.m.

Lord HARMAR-NICHOLLS

My Lords, I regret that my name was not attached to the list of speakers and, as a recompense, I shall be brief. Recently I became president of the National Wholesalers' Association and I was very impressed indeed by the recommendations that were put in by the British Stationery Office Productions Federation when the Post Office proposals for tariff increases were being, discussed in March of last year. Three of the points that were put in fit in properly to this debate initiated by the noble Earl, Lord Kimberley.

I see that my noble friend Lord Alport has left the Chamber. However, I agree with him absolutely about the esteem in which we should regard the Post Office. Indeed, the first very important Parliamentary office I held, 25 years ago almost exactly, was as the Parliamentary Private Secretary to the Assistant PostmasterGeneral—and one cannot have a much higher office than that! During that period I appreciated the esteem in which that great Department—which covers such a wide front and which is such an essential part of the make-up of this country—was held. I therefore agree completely with Lord Alport about it being a national service. However, we should remember that it is also one of the arms of industry. It is certainly one of the arms of the British Stationery Office products industry, a point they make perfectly plain when they say: We rely upon an efficient postal service for our livelihood and for our expansion and any increase in postal charges or changes in the service have an immediate effect on our industry". What they are saying is that if, for reasons which on other grounds may be very good indeed, prices are put up, or the system is changed in such a way that it affects them, we may be inflicting unemployment on those industries which rely on this Department to exist at all.

Therefore while I find my noble friend's description of a national service very attractive and indeed true, it is also part of our industrial arm and there are three points which I think will pinpoint that. We ought to recognise that, while an organisation which has to cover the whole country has to rely to a large extent on what is known as rough justice in order to operate at all—because administratively it is so huge and so difficult—we must find ways, within the broad span of what is called rough justice, in which discretion and good sense can be used.

In this regard my one point concerns the question of Christmas cards. Very many people are employed in the manufacture of Christmas cards, which is an important section of our industrial makeup. When the cost of postage of Christmas cards was increased to the same level as that for letters and similar items it was found that, of the 1,000 million Christmas cards sold in 1975, 40 per cent. were hand delivered because of the extra cost of the postage. From the point of view of the Post Office, if finance is one of its problems—and we know it is—perhaps it should depart from rough justice by recognising that Christmas is a special time and that the sending of Christmas cards is a special activity confined to one particular time of the year. It could he that the Post Office, if it recognised this, would increase its own income while providing the satisfaction that a national service, as my noble friend Lord Alport said, would give to the public generally.

It might be said that an increase of ½p is hardly noticed, but one does not send only a single Christmas card. Ordinary families send several Christmas cards—some send many—and so the increase is not one ½p but several during that period of the year. That makes all the difference to the question of whether people buy Christmas cards, which in turn affects maintaining people in employment as well as giving income to the Post Office itself.

With regard to postal charges, it should be remembered that during the Post Office strike the pools promoters and various other big firms started their own delivery service, and this business has never been returned to the Post Office. It could be that, if an attractive price inducement were given, such organisations could be persuaded to use the Post Office service again, which would be better for everybody and produce more money for the Post Office itself.

As distinct from the Christmas card, there is the pictorial postcard, which is a very important part of the card industry. I should like to mention some figures which are involved here, and it is these figures which have caused me to intervene very briefly in the debate. In the pictorial postcard industry in 1973/74 sales totalled 359 million. In 1974/75 the figure had fallen to 198 million, and in 1975/76 it was down to 163 million. That is due to the extra cost on postal charges, which has discouraged this particular industry very much. The pictorial postcard, like the Christmas card, is a special item which goes with holidaying and similar pursuits, and so here a separation from what I call the rough justice could, I believe, be sensibly introduced. It is not without interest—and I did not know this—that many foreign countries, including the United States of America, West Germany, Holland, Belgium and the Scandinavian countries, as well as, I think, many others, reduce the postal charge for pictorial postcards to below the normal level for the very reasons that I am now arguing. So I believe that here again special discrimination could be made which would meet the needs of the general public—as a national service should do—and at the same time bring in extra income which the Post Office badly needs.

My next point was made very well earlier by my noble friend from the Front Bench. When what I understand is called the weight step on packages was reduced from 60 grammes to 50 grammes, calendars and certain Christmas cards and postcards were brought within the range that was affected. The argument that an extra ½p would not make much difference is completely shattered when not only has an extra ½p to be paid on the postage, but, by a reduction in the weight step from 60 grammes to 50 grammes, covering many calendars and postcards, a further 3½p is put on the cost. So the actual extra impost on the posting of calendars and certain cards is not ½p, which can be passed off as being not very much, but 4p each time. That is the point that my noble friend made, and this situation is having a disastrous effect on the prospects of an important industry, which employs many people and which is, I believe, an essential part of the general industrial make-up of this country. Those points may be small when taken separately, but they are a very important part of maintaining general efficiency in one of our basic industries, and I hope that at the appropriate time they will be taken fully and properly into account.

4.18 p.m.

Baroness MACLEOD of BORVE

My Lords, I, too, must apologise for not putting my name on the list of speakers for this debate. I presumed that other noble Lords would have said what I now intend to say, but I hope to take up not more than three minutes of your Lordships' time. My point concerns the enormous cost of the spoken word and the written word, the spoken word being the telephone and the written word being letters. There is involved here the enormous cost of communication within families. When I mention families, I am sure your Lordships will all be aware that nowadays families are broken up more than ever before. In some cases grandparents are moving away to live, while younger members of the family may be going abroad or to far away places, such as Scotland, or to other distant parts of the country. They are not remaining in one community as they used to do.

In my view, the fact that such people are not able to communicate is having a disastrous effect upon the family. When I say that they are not able to communicate, I mean that even a very brief telephone call from, say, a son to his mother every Sunday evening must now, to my knowledge, be abandoned because of the enormous cost to the son. This means that the mother, or the grandparent, as the case may be—people in this age group, including retired people—or a father living alone, are more lonely than they were previously. They are more cut off than ever before from the family which they have raised. In my view, the spoken word is far more important in this context than the written word, but the written word—the letter—is also of vital importance to all who try to keep the family together. When it takes up to one week for an 8½p letter to be delivered 100 yards in Hertfordshire near where I live, one would like to use a pigeon if one could catch one, or, as I do now, deliver letters. It is not worth trusting the Post Office to deliver mail within a reasonable time.

My main point is the communication of the family because I seriously think that, if the rates for letters and for telephoning were, because of the large surplus we have heard of, able to be reduced, a great number of families would be much happier. I am sure that all of us in this House know of family connections—grandparents, mothers, daughters—who long to communicate and to keep up some tie with the family, whereas, with the vast amount that it now costs for these methods of communication, family ties are becoming less close and are more often broken. That is all I have to say on the subject.

4.22 p.m.

Lord BOWDEN

My Lords, if I may presume to do so, I should like to ask a question of the Minister who is to reply to the debate. It relates simply to the rate at which the Post Office is continuing to invest. Over a period of many years, the Post Office used to recruit 200 or 300 engineers at a time. Over the past decade the number increased to 700 and the forecast was that last year it would recruit 840. In fact, it recruited 35, as a result of an enormous, unpredicted and totally catastrophic cut-back in the investment programme. I should like to ask the Minister whether this number is likely to be increased again, because unless the Post Office can recruit more engineers, particularly into the telecommunications industry, it is extremely improbable that it will survive as a going concern when the time comes that these young men ought to be there in posts of responsibility.

4.24 p.m.

Lord NEWALL

My Lords, we have heard quite a lot of knowledge being aired this afternoon. Since I cannot really contribute greatly to the knowledge, I shall be fairly brief. First, I should like to talk about the telephone system and, in particular, the equipment. I think we would all agree that there have been considerable improvements over the past few years. However, I shall come back to that in a moment. The main problem seems to be—and this has already been raised by one or two of the previous speakers—the fact that there is an equipment monopoly. The choice of equipment appears to be extremely limited and people seem forced to use what can only be called "illegal" equipment. For instance, I know that many people have loudspeaker telephones from Sweden. They are highly efficient and very small and compact, and they compare very favourably indeed with the rather monstrous efforts which the Post Office provide and which are anyway not very efficient.

I am told that the intercom system on Independent Television News is Italian because the same thing does not exist over here. That is not illegal, but it bears on what I shall say in a moment. Why can we not have the 500 Series telephone which is used in America? It is a telephone with four or five or three or four lines in the telephone itself and it avoids the need for an exchange. It is very useful for small businesses. It seems to me that this would be an ideal piece of equipment to use here. It would make us all more efficient.

The Post Office licenses various people to use telephones but has the right to withdraw the licence. The sort of telephones that I am thinking of are the porter telephones in hotels and flats, the warden calls and the door entry telephones. I am told that most of these contracts can range up to 14 years but that the licence for these can be revoked by the Post Office at any time. I should like to ask the Government why this is still necessary. I can see that there might have been some point many years ago, but I cannot see that there is much point now. However, it is obviously very difficult for the companies concerned.

Many of us will have seen the various telephones on sale in shops. Even some of the larger stores in Knightsbridge are selling telephones which are made all over the world, and one shop I know even goes to the extent of exhibiting a notice saying, "These telephones are illegal". However, people buy and install them, and I cannot remember hearing of any prosecutions whatsoever. Surely, this is an anomaly and is a fact to which the Post Office must face up. I think that it should begin to understand that most countries have agreed that supplying equipment to the building is all that is necessary, and that it should allow a wide choice of equipment to be used inside the building, provided it ties in with the various wiring systems that are necessary.

As a result of monopoly, I know that, though there are some very competitive tenders for equipment, their number appears to be limited. I am not quite sure in my own mind whether enough attention has been paid to the different sorts of equipment that are available. I believe that any good private company would ensure that its equipment was so good that it would be able to export a lot of it. Can the Government tell us—not necessarily today—how much of our equipment which is licensed and made here is actively exported? I have a feeling that the marketing of our equipment is sadly lacking. I also believe that it is true to say that, if the Post Office does not approve the equipment, the manufacturers will not make it. Therefore, it is a vicious circle. I am also told that of the telephone answering equipment which is licensed here none is available from the Post Office itself and the latter takes no interest. I should have thought that this was a highly competitive area where it could make some extra money.

I know that a lot of money has been spent on equipment. Perhaps some has been not so modern as it might have been, however. I know that decisions have to be made many years in advance, and I am looking forward to hearing in the near future of some really good electronic equipment being installed which will be equal or even better than any in the world. The present scale of wrong numbers and crossed lines is, to my mind, beyond a joke. Anybody who is in business is tremendously affected by this, and the number of extraordinary conversations that I have almost listened to is legion. However, I shall not bore your Lordships by telling you about some of those.

One further point is that no amount of modern equipment will make people more efficient. I should like to see more attention paid to the calls which are made through the operators and calls made to operators, engineers and, perhaps, telegrams. They are sometimes answered extremely slowly, and often one is told, "Well, we are very busy". I am afraid that I do not accept that as an excuse. I believe that the patterns must be very clear by now and I feel that, in the last resort, there could be some recording system saying, "We have your call in hand and it will be taken care of as soon as possible". However, I believe that staffing levels need to be looked at rather carefully. The American system—with which I am familiar having lived out there for five and a half years—is probably the most efficient in the world; one can get any State in the country very quickly indeed and with no trouble at all. Perhaps the American operators have a fuller training. I do not know. The noble Lord, Lord Wall, brought up the factor of monopolies existing in America, but the great point here is that those are private and not State monopolies. I believe that that is why the Americans are so much more efficient. In a way, they are competing.

Before I leave the telephone system, I should like to take issue with my noble friend Lord Alport. I felt that he was a little wrong in saying that we could do without the telephone. I believe that my noble friend said that we were able to do without the telephone, but I feel that the data transmission services which are provided, and, sometimes, the lifelines of old people, are very relevant in this case. Perhaps I can quote briefly from the Observer of 17th April, where an elderly person wrote: I live in a town full of elderly people, to whom letters are a lifeline. Some are just elderly, some handicapped, many lonely and unable to afford a telephone. Regular letters, like warmth, are a must". This brings me on to the next point, where I leave telephones and talk about Sunday letters. It is a "hot potato", I know, but I think that, although most of us have talked about it, there is no doubt that the post on Sunday is a very difficult problem to solve, for financial reasons. I have no doubt that the Post Office is correct in saying that the percentage of post on Sunday is extremely small, but I think it is the type of people who are being hurt that is really the point. So much can be done with a letter written on a Sunday, especially when no other time is available; and I think that the quote from the Observer brings this out, because it goes on to say: There is nothing, absolutely nothing, to replace the feeling that your letter will he on somebody's mat on Monday morning". My Lords, the noble Earl, Lord Kimberley, touched on advertising, and perhaps I can refer to a letter from the Post Office written to my noble friend Lady Young which talks about advertising. I note that in 1971/72 the cost of postal advertising was £1.1 million and that in 1975/76 it had been reduced to £0.9 million—quite a reduction—whereas, on the other hand, telecommunications advertising started at £2.1 million in 1971/72 and was up to £3.4 million. I must say that I agree with most of the remarks made by the noble Earl, Lord Kimberley, about the unnecessariness of a great deal of the advertising; but in view of these comparisons, I must ask the Government whether the Post Office is being run-down in any way because of lack of advertising, which obviously it feels, in general terms, is a necessary evil. May I, lastly, make one very small plea to the Government that they should use their best influences on the Post Office in regard to the wearing of uniforms by postmen? When a postman is in uniform he is very obvious because of the difference in his appearance from all the others one sees frequently nowadays who do not seem to feel that wearing a uniform is at all necessary.

My Lords, although we have a little time in hand, there seems to be no need to drag on with this matter. I think we must all thank the noble Earl, Lord Kimberley, for giving us the opportunity to bring out into the open some very glaring gaps in the efficiency of the Post Office, albeit that we certainly have a service that is better than many others around the world.

Lady RUTHVEN of FREELAND

My Lords, I did not put my name down to make a speech, nor do I mean to make one, but I have asked the noble Earl, Lord Kimberley, whether I might ask a question before the Minister rises to reply. It is a quite banal question, and perhaps does not affect a great many people, but, personally, I have a lot of correspondence with people overseas, and the appalling thing about our airmail paper is that the gum is so bad that the flap will practically never stick to the letter. I think the Post Office ought to make an effort to use a better gum for their overseas letters.

4.35 p.m.

Lord WINTERBOTTOM

My Lords, I believe this has been a valuable debate. The last time we in this House had any substantial time for an exchange of views on the Post Office was, I believe, in November 1975. We have had, of course, lively exchanges at Question Time but think we can all agree that it is a good thing that from time to time we should cast our eyes over major public bodies such as the Post Office, and the noble Earl, Lord Kimberley, deserves our thanks for raising this topic. Having said that, I should like to go a little further and say that I think that the subject we have discussed today is worth more than a mini-debate. I think that within this mini-debate there is a major debate struggling to get out. We might bear this in mind in the future and see that the usual channels enable us to express our views at greater length in a major debate. Because the subject is immensely important.

As the noble Lord, Lord Wall, pointed out, this is an industry about the size of the United States Steel Corporation, and the noble Lord, Lord Redesdale, very rightly indicated his views about how an organisation of this size should be made accountable to Parliament. There is of course, as everybody will agree, a difference between accountability and meddling, and speaking from this Box or from any Box one finds that people ask questions which really are part of the day-to-day running of a nationalised industry and should be kept out of general debate. But it is not quite as easy as that, particularly in the case of the Post Office, where every day, every one of us, probably, is in contact with someone working in the Post Office.

The noble Earl, Lord Kimberley, although recognising the problem, I think put his finger on the difficulties we face, or which any Government face, when he quoted from the Act, showing that the Act laid certain duties on the new Corporation which, on certain occasions, could clash, and yet did not lay down any system whereby this conflict of duties could be resolved. The Conservative Administration used the Post Office as a social implement when it was fighting inflation. We in the Labour Party, perhaps strangely enough, went back to strict commercial orthodoxy and raised the tariffs charged on both parts of the Post Office services very substantially to put both parts of those services back into profit. We were taking a much more capitalistic view than the Conservative Government had taken before us.

I think the dilemma indicated by the noble Earl is profound and, as I have said, is worthy of a major debate. That view of mine has been, I think, reinforced by the most important speeches of the noble Lord, Lord Wall, and the noble Lord, Lord Alport, who restated the dilemma in a different way. They pointed out that the postal services and the telecommunications services are two entirely different animals. As the noble Lord, Lord Alport, pointed out, we could get on without the telephone as a social instrument, but we could not get on without the post. The noble Lord, Lord Wall, pointed out that the postal services were labour-intensive, whereas the telecommunications industry was capital-intensive, and that for that reason, again, we were dealing with two separate types of social organisation. The two noble Lords proposed solutions to this dilemma which differed, but not very widely, I thought: two Corporations by Lord Wall, a State service plus a Corporation by Lord Alport.

These things are matters of very great interest and importance when we are dealing with an organisation which employs about 2 per cent. of the working population of this country. It really is quite a size—almost elephantine. For this reason, I believe that perhaps those noble Lords who have shown their interest today might think it worth while debating the annual accounts of the Post Office, which are laid before Parliament and which are likely to be published in July, for the year 1976/77. This is the conventional way of avoiding meddling while ensuring supervision of a nationalised industry; and by that time, of course, the Carter report should be available to us. A debate on a subject of this importance, but not within a limited time-scale, I think could be of great value.

I believe that many of the points raised today must have been put in front of the Carter Committee; and I noted the point made by the noble Lord, Lord Redesdale, when he said that, because of leakages, we should debate this as soon as the Carter report is published. I shall bring that point of view to the notice of my right honourable friend the Secretary of State. But I suppose we shall have to wait for Carter, and perhaps, as some other noble Lord said, for Posner, because that deals with the situation in the telecommunications industry and, taken in conjunction with the annual report of the Post Office, we might in fact get nearer to the heart of the matter than is possible to us today in this short but, I think, very valuable debate.

I should like to underline the problems of the Post Office which arise from the fact that it is so large. Because of its size, of course innumerable mistakes must be made. If one judges its performance, one must take any mistakes that are made, and any shortcomings, in relation to its size. For instance, 30 million letters are collected daily from 125,000 pillar boxes, post offices and other collecting points, and from these boxes letters are delivered to about 21 million addressees. At the end of the financial year 1975/76 there were 21 million telephones installed in the United Kingdom; that is to say, we are in the third position after the US and Japan in the actual installation of telephones in relation to our population. A total of some 16,000 million calls were made during the year, virtually all on automatic exchanges. Roughly 2 per cent. of the working population is employed by the Post Office.

I stress these points so that where shortcomings can be seen one must realise that, with the very large number of human beings and the massive banks of machinery involved, shortcomings must come about. As the noble Lord, Lord Platt, pointed out, if we try to compare statistically the work of our Post Office with others, I think that the record is very far from bad. We have the British habit of focussing attention on what goes wrong and losing sight of our achievements. I should like to support what the noble Lord, Lord Platt, said by listing a few of the achievements of this country. Letters delivered per employee by the Post Office compare well with every other EEC country except the Netherlands. United Kingdom charges for basic inland and overseas letters are lower than those of any other EEC country and are not very different from those in the United States, where the post office receives a hugh subsidy. As I have said, the United Kingdom has the third largest total of telephones in the world.

In recent years, we have seen the Post Office developing and evolving such new services as Household Delivery, Datapost and Expresspost to meet new types of demand from its customers. I have no doubt that more needs to be done; but that is not surprising because, after all, business is a constant struggle to strike the optimal balance with external demands within a given set of financial and social objectives which frequently are in conflict with each other. Not only has the Post Office got to ride the world economic swells, it has also to overcome the philosophies of Governments—and that is, perhaps, even more difficult.

At this point, I should like to take note of remarks made by the noble Lord, Lord Newall, in relation to the actual dynamic industrial policy for selling abroad the telecommunications equipment which is produced in this country under semimonopoly conditions. Perhaps the House will forgive me—as we have a certain amount of time—if I develop this point extensively; because I think it is important for the future competitiveness of our telecommunications industry. We know that it is not only private individuals who buy foreign equipment, but the Post Office itself from time to time does the same thing. This, in fact, has not been a widespread and large-scale problem. Britain's telecommunication requirements have grown, as have the similar requirements of other large developed countries indigenously and manufacturing industry has, generally speaking, developed with its eye on the Post Office as its main customer. This is true also of other developed countries.

In many respects those other countries' equipment differs in technical characteristics from ours and it follows that there is not at present great scope for export and import trade with such countries in telecommunications equipment of the kind used by the Post Office. In fact, figures used by the EEC Commission suggest that less than 5 per cent. of telecommunications equipment within the EEC is purchased across frontiers. I would suggest, although I speak without any exact knowledge, that as the Community develops, standardisation must also develop between the communications systems of the nine members of the Community. I would feel—again speaking personally—that it would be better to try to harmonise our telecommunications equipment than our beer. This would be of greater value to us.

The disparity at the moment in these technical characteristics has been widely realised—for instance, in the EEC—and that requirement for open international tender of the sort widely applied in other public purchasing fields is at present inappropriate to telecommunications. That is as far as I can go today. We have the fact that in all countries, with the exception of the USA, there is a Government monopoly operating. The Government naturally wish to support their own indigenous industry and at the moment this situation inhibits the export in a large way of telecommunications systems to developed countries from this country. But the point made by the noble Lord is of importance, and for that reason I am underlining the point he has made.

My Lords, may I turn now to points made by a number of noble Lords in the course of the debate. One noble Lord raised the question of charges made by the Post Office for calls passed through the operator when the caller cannot dial directly or because the dialled call has failed. The Post Office has recently changed its policy on charges for calls connected by the operator, and for the reason that as from 4th January such calls will be charged at about the dialled rate.

Turning to the various points made by the noble Earl, Lord Kimberley, I must say also that I thought he was slightly pessimistic about the cost of Sunday collections. We believe they are six times as expensive as weekday collections rather than the eight times he suggested. That, of course, does not alter the principle. There is a very high price to be paid for Sunday collections and perhaps we will adjust our letter writing habits and thereby enable very substantial economies to be made in the cost of running our postal services.

The noble Lord, Lord Ferrier, made an important point when he suggested that overnight letter telegrams might, to a certain extent, mitigate the disadvantages of the limit on Sunday collections. All I can do is to draw his views to the attention of the Chairman of the Post Office. As I understand it, the noble Lord feels that if over the weekend the Post Office could waive the 50p impost, it might encourage people to use the overnight letter telegram over the weekend to a greater degree.

Lord FERRIER

My Lords, but without mitigating in any way the inconvenience of the absence of Sunday collections or, even more, the absence of a late Saturday collection.

Lord WINTERBOTTOM

My Lords, in relation to that, when we talk about the lifeline factor in telephone communications, I have been advised that the areas where regional directors have exercised their powers to reduce charges have been the following: the Eastern Telecommunications Region, the Midlands Telecommunications Region, the North-Western Telecommunications Board, Wales and the Marches Board and the Scottish Board. I do not know whether there is a board covering the whole of Scotland, or whether Scotland is broken up into divisions, but my advice is that the Scottish board as a whole has used its powers. Discounts were £5 or £10 per installation. I have to add the bad news, however, that unfortunately discounts are made for relatively short periods because the actual discount made had a relationship to the unused facilities. I have no information on how many connections have been made so far at the reduced rate. On the other hand, the power is there. Noble Lords are alert to the existence of this power, and I am certain that use will be made of that knowledge.

The noble Baroness, Lady Macleod of Borve, will also have noted this point, because it is part of the way in which the actual lifeline costs could be reduced. I am certain that the point she makes is of great value and must be balanced on the social service side of the postal communications and telecommunications systems. The noble Lord, Lord Bowden, made a very important point about an uneven rate of recruitment for young telecommunications engineers. It is a highly technical point, but I will write to him and give him information on policy and a forward projection as to what is expected to happen.

There was another point which I should have touched on a little earlier; that is, the question of the Post Office's experiment in industrial democracy, to which more than one noble Lord referred. The noble Lord, Lord Wall, mentioned the proposed Post Office experiment which would involve, as we know, a single clause Bill to increase the size of the Post Office Board. Final decisions have not yet been taken on this and therefore I cannot at the moment comment upon the matter. Again, if we have a major debate later in the year, by that time decisions should have been reached on whether to go ahead on the Post Office's own proposals, and whether to go ahead with Bullock in his present or in some transformed state. That is all I can say today in answer to what I found a most interesting debate.

Lord HAWKE

My Lords, there are two important points to which the noble Lord has not replied. First, my noble friend Lord Ferrier asked whether the ancillary services of the Post Office were being properly rewarded; that is, payments of pensions, et cetera. Also, did not the noble Earl state that there was a job in the Post Office known as a "delayer", and the general public are very exercised because they believe that their second-class mail is being deliberately held back. Is that true?

Lord WINTERBOTTOM

My Lords, the noble Lord, Lord Ferrier, asked whether the Post Office, when it undertook work for the Government—for instance, when it arranged to pay old-age pensions—was properly remunerated. This particular point was considered by the Select Committee on Nationalised Industries in another place. In their reply in October last year, the Government explained that existing arrangements which had been freely negotiated between the Post Office and the Treasury already met the recommendations of the Committee. I believe noble Lords who are interested in pursuing this matter will find it in Command Paper 6629, which was published in October 1976. As regards the fascinating character called the "delayer", and the technique known, as I understand it, as "bumping", I can say nothing helpful at all. It is perhaps useful that the role of the "delayer" and the art of "bumping" have been brought into the light of day since now many people will watch out for the "delayer" and his "bumping".

Having said this, ending on a slightly frivolous note, may I repeat what I said at the beginning: I think that the debate has been most valuable, and I personally also think it merits a much larger debate when we have more facts which we can use to judge the efficiency and possible future organisation of what is one of our major industries.

Baroness WARD of NORTH TYNESIDE

My Lords, can the noble Lord kindly reply to the very important points which were made by my noble friend Lord Harmar-Nicholls? Will the noble Lord refer them to the appropriate Department for consideration? Those are the kinds of things in which the ordinary public are interested. The noble Lord has hardly commented on them. May I have an answer to those most important points, please?

Lord WINTERBOTTOM

My Lords, the noble Lord, Lord Harmar-Nicholls, was courteous enough to mention to me that he had to leave before the end of the debate. There is a convention in this House that I do not have to reply to points raised by noble Lords who are not in their place. But the debate will be studied and the points made by the noble Lord, Harmar-Nicholls, will doubtless be noted.

4.57 p.m.

The Earl of KIMBERLEY

My Lords, first of all I should like to thank all noble Lords who participated, whether by listening or speaking, in the debate this afternoon. I should like to elaborate on what the noble Lord, Lord Redesdale, said about Sunday collections which have been mentioned by several other noble Lords. I believe that the Post Office claim that they have saved £9 million by not having Sunday collections. However, if 3 million letters were posted on a Sunday, as opposed to 30 million which are posted on most other days, at first-class rates, by my mathematics this would produce a revenue of over £13 million, so maybe we might eventually get back to Sunday collections.

The noble Lord, Lord Wall, has a much greater knowledge of the Post Office than I do—because I only speak as a member of the general public—and I agree with most of what he said. I agree that the telecommunications is a commercial enterprise and, unfortunately, the postal system is not. That again brings us down to the point that it may well be a good thing eventually perhaps to split them apart. The noble Lord, Lord Wall, also mentioned the new Board, and so did the noble Lord, Lord Redesdale. I have been led to believe that the proposals which were worked out about the new Board were done basically in private by the Post Office, the unions and the Government, and I believe that no user organisations were consulted about this at any stage. As yet, there have not been any proposals as to how the user's interests may be safeguarded. Industrial democracy, certainly if carried out carefully and well, could be very beneficial, but I feel that your Lordships would like reassurance—which perhaps can be provided only by hard evidence—that the experiment will produce results. If it was done badly, if anything it would be counterproductive.

The noble Lord, Lord Alport, said that the Post Office is a public service, and I agree with him absolutely. That goes back to what many noble Lords have said already this afternoon: that postal deliveries are a necessity. The noble Lord, Lord Ferrier, when talking about his telecommunications, said that perhaps we should have greater use of discretion, and I think the noble Lord, Lord Winter-bottom, was fairly helpful over that. The noble Lord, Lord Platt, said that he was in favour of the Post Office, and perhaps may have seemed to imply that I was not. But I am in favour of it and merely feel that it could be improved.

The noble Lord, Lord Harmar-Nicholls, who told me he had to leave, talked about Christmas card manufacturers, and said there were 1,000 million cards in 1975. He also said that 40 per cent. of the cards were hand delivered. If my simple arithmetic is correct, if that 40 per cent. had been posted, say, with a 4½p stamp at Christmas, it would have generated revenue for the Post Office of something like £25 million. So perhaps the noble Lord, Lord Winterbottom, could ask somebody to look into that particular point and see whether it might he feasible next Christmas.

The noble Baroness, Lady Macleod, talked about communications between families, and I am sure that all your Lordships in this Chamber would agree with her. As regards the point put by the noble Lord, Lord Bowden, of course I cannot answer for the Government, but I think the noble Lord, Lord Winter-bottom, gave a satisfactory answer. The noble Lord, Lord Newall, said we ought to have more efficient equipment; and I agree. He said that if we had that we could export more, particularly answering service machines, and so on. However, the only point I am not certain about is whether, when I dial 100 or whatever it may be for telegrams, I want to be told "You have been answered and you will be dealt with when it is your turn"—because I think one might then wait for ever!

The noble Lord, Lord Winterbottom, said there was not time enough to discuss the whole of such a large subject. I agree entirely with him, and I think it would be very good if we could have a major debate in your Lordships' Chambers, particularly following the receipt of the Carter Report. I should be very interested to know whether, later on, the noble Lord, Lord Winter-bottom, could write and let me know, if he could find out, what the term, "about the rate" actually means. I was optimistic about the Sunday post: I thought it might cost four times as much. The noble Lord, Lord Winterbottom, said it would cost six times. It was the noble Lord, Lord Melchett, who said it might cost eight times. Finally, I should like to thank the noble Lord, Lord Winterbottom, for answering this afternoon on behalf of the Government, and I should also like to thank all the other speakers who have participated in the debate. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.