Lords Sitting of 16 November 1977

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.

LORD NOEL-BAKER
The Right Honourable Philip John Noel-Baker, having been created Baron Noel-Baker, of the City of Derby, for life—Was, in his robes, introduced between the Baroness Llewelyn-Davies of Hastoe and the Lord Peart.

ARMED FORCES' PAY
2.47 p.m.
The Marquess of DONEGALL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they intend to increase the pay of the Armed Forces to a level comparable to that earned in industry.
Lord WINTERBOTTOM: My Lords, as my right honourable friend the Secretary of State for Defence said very recently in another place, it is the Government's intention to restore the full comparability of the military salary as soon as conditions permit.
The Marquess of DONEGALL: My Lords, I thank the noble Lord for that reply, which is encouraging as far as it goes, but may I ask whether Her Majesty's Government would agree that a private soldier, or a non-commissioned or junior officer serving, if you like, with a bomb disposal unit in Belfast—to quote just one of many possibilities—should receive in cash or in kind at least as much as can be earned in the docks or the coalmines?
Lord WINTERBOTTOM: My Lords, that is really, at the first stage of negotiations, not a question for Her Majesty's Government. The Armed Forces' Pay Review Body is receiving evidence now. What Her Majesty's Government have said is that full comparability of military salary will be restored as soon as possible. It is generally recognised that this comparability has slipped.
Lord CARRINGTON: My Lords, does the noble Lord not find something ironic in the fact that the Armed Services, whose pay has fallen further behind, and certainly as far behind as anybody else, should be doing the job of those who are on strike?
Lord WINTERBOTTOM: My Lords, the world is full of large and little ironies.
Lord SHINWELL: My Lords, can the noble Lord give this House any estimate of what it would cost to raise the pay and other emoluments of the men in the Forces, however much they deserve it, to bring them up to the rates that are common in industry? I would ask: Is it wise to furnish expectations which are going to be very difficult to fulfil?
Lord WINTERBOTTOM: My noble friend, whose deep respect for the Armed Forces is well known, is, I think, a little pessimistic. My right honourable friend has talked of full comparability of the military salary, which means not only with industry but within the whole range of skills which the Army possesses. I have every confidence that, within a comparatively short period, when conditions permit, full comparability will be restored.
Baroness VICKERS: My Lords, may I ask the noble Lord whether, in view of the fact that recruiting figures have gone down considerably, he does not think that that is due to lack of pay?
Lord WINTERBOTTOM: My Lords, the noble Baroness is not altogether right. The drop in recruiting in recent years has been due to a drop in the requirement for replacements of two of the three Armed Forces.

TAX ASSESSMENTS: PERIOD OF NOTICE
2.51 p.m.
Lord BOYD-CARPENTER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware that the Inland Revenue frequently send Notices of Assessment to Income Tax and demands for payment within 30 days during the holiday season, and that as a result taxpayers have often very little time to study these demands before the expiry of the 30-day period after which interest is payable; that this problem is accentuated by the increasing dilatoriness of the postal services; and whether they will either extend the 30-day period or instruct the Inland Revenue not to issue demands during the holiday season, or both.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, the period of 30 days from the issue of a tax assessment before the tax is payable or interest starts to run is a minimum and in many cases the taxpayer will have a longer breathing-space. But, even where there is only this minimum period, I am not aware that 30 days—which is a standard period for many tax purposes—is generally found to cause difficulty. It would not be practicable to suspend the issue of tax assessments during the time when taxpayers may be on holiday.
Lord BOYD-CARPENTER: My Lords, is the noble and learned Lord aware that I am not asking him to suspend the issue of tax assessments but only to permit a longer period of notice?— —since it may well be the case that a taxpayer who is away on a well-earned holiday has not sufficient time on his return to consider the accuracy of the assessment, to take advice or to consider what steps he should take. Es the noble and learned Lord aware that, since the interest provisions were incorporated, this has become a very acute difficulty and one which raises a good deal of feeling?
Lord McCLUSKEY: My Lords, as I have already said, I am not aware that
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this is generally found to cause difficulty. I think that this noble House should appreciate that there are really two basic dates in the year—1st January and 6th July—when tax becomes payable for the kind of case which the noble Lord seems to have in mind, and in the great majority of cases the person who receives a notice of assessment and a notice to pay will have negotiated the assessment beforehand. He will tend to have a professional adviser who is entitled, at his wish, to have a copy of the notice sent to him, and in the great majority of cases there should be no difficulty.
Lord BOYD-CARPENTER: My Lords, is the noble and learned Lord aware that, no doubt through my fault, he has not fully apprehended the point I was putting to him, which is that the assessment becomes final after 30 days if an appeal is not entered, and if the taxpayer is away on holiday he has no chance to enter an appeal? Will the noble and learned Lord consider that aspect of the matter?
Lord McCLUSKEY: My Lords, if the taxpayer is going on holiday, he knows that he is liable to pay tax because he has made a gain. He can cause the inspector to send a copy to any person whom he cares to name, and then an appeal may be entered if he chooses to appeal. If he does not appeal within the 30 days and he can demonstrate that he was away, then he will be allowed to appeal out of time. That is contained, I think, in Section 49 of the Act of 1970.
Baroness WARD of NORTH TYNESIDE: My Lords, is the noble and learned Lord aware that I am fully in support of my noble friend's Question? Is the noble and learned Lord also aware that I think his Answer was quite ridiculous, and as if he really did not know anything at all about it?
Lord McCLUSKEY: My Lords, I am certainly not surprised at the first part of the question. I must confess that I do not know very much about it, but I spent a long time studying Volume 1 of the taxes Acts in order to discover my answers. Despite her lack of confidence in me, I can assure the noble Baroness that I have given answers which are totally accurate, and that if

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any person finds that 30 days have elapsed owing to his having had a prolonged holiday, then he may, on his return, ask for the time to be extended and it will be extended and no one need be discomforted at all.
Viscount ST. DAVIDS: My Lords, will the noble and learned Lord confirm that what happened to me when I fell into exactly these circumstances is the practice, and will he encourage the practice? An assessment was sent just before I left for seven weeks at sea. Owing to a postal delay, it arrived after I had gone, and I was therefore unable to deal with it in the proper time. But on informing the income tax authorities, they promptly remitted the period and allowed me to carry on exactly as if I had done everything at the proper time. Will the noble and learned Lord please confirm that that is the practice, and that it should be encouraged?
Lord McCLUSKEY: My Lords, I am indebted to the noble Viscount, who has given us a practical demonstration of the application of Section 49.

ELM DISEASE IN SCOTLAND
2.55 p.m.
Lord KILMANY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether there is any provision whereby a householder in Scotland whose property includes a diseased elm tree can claim financial assistance in the expensive operation of having the tree removed.
Lord STRABOLGI: My Lords, the responsibility for felling trees which are dead or dying for any reason is the responsibility of the owner. The Dutch Elm Disease (Local Authorities) Order 1977 gives Scottish regional authorities powers to serve notices on owners requiring them to fell and destroy diseased elms at their own expense. These authorities also have powers to remove sources of infection without cost to the owners; the choice of action, however, is at the discretion of the authorities.
Lord KILMANY: My Lords, may I ask the noble Lord whether he is aware that South of the Border certain county councils are proceeding apace with removing diseased elm trees, that thousands of pounds have been spent at a rate of about £30 for the removal of each tree and that towards this a grant of 62½ per cent. is made by the Countryside Commission? What I should like to ask the noble Lord is whether we in Scotland could follow that very helpful course and enlist the assistance of the Countryside Commission, thereby saving from great anxiety a number of poor persons who find themselves at risk of being faced with a very substantial bill?
Lord STRABOLGI: My Lords, there is nothing to prevent an owner applying to his local authority for assistance, as has been done in some regions in the South of England, notably in East Sussex. With regard to the future, a Working Group has been formed by the Convention of Scottish Local Authorities, including representatives of each of the Scottish regions, with the Countryside Commission for Scotland and the Forestry Commission. The first meeting was held in March last, when it was agreed that the main function of the Working Group would be to act as a forum for the exchange of information between regions, and I will see that they are acquainted with the points put by the noble Lord.
Lord BARNBY: My Lords, as the Answer applied to Scotland, can the noble Lord say what is the situation with regard to England, because the problem is very widespread and has a very wide effect? The noble Lord indicated that assistance from some quarters is available for Scotland, and may I ask whether that applies to England? Also, can he say what is the position with regard to trees menacing a highway which are apparently rooted on common land?
Lord STRABOLGI: My Lords, the position in England is that there are some 25 million elms in the country as a whole of which, I regret to say, half in England and Wales are dead or dying. The position legally is the same on both sides of the Border. There is no money available from central funds, nor was there of course during the time of the previous Government. But there is nothing to

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prevent an owner, as I said, applying to a local authority for assistance, and indeed in extreme cases of hardship assistance may be available from the Supplementary Benefits Commission.
Lord CAMPBELL of CROY: My Lords, while we are grateful for what the noble Lord has said, in so far as it goes, Dutch elm disease has been creeping northwards and is only just starting in Scotland. Will the noble Lord give an assurance that the authorities there will be as ready to assist as are those South of the Border? Further, can he give an assurance that the Government will do their best to assist in the removal of dead wood, wherever it is to be found?
Lord STRABOLGI: My Lords, we have no dead wood on this side of the House. With regard to the position in Scotland, there are 2 or 3 million elms, of which at present I am glad to say only 3,000 to 4,000 are diseased. I am sure that, wherever possible, local authorities there will be as willing as they are South of the Border to help owners.
Lord BARNBY: My Lords, since the matter can apply to trees which are often on rights of way, does the noble Lord realise that this will involve a great deal of litigation? Would he consider making a recommendation to the Minister that consideration should be given to the grant of assistance where the obligation to cut down trees is imposed by a county council and there is a dispute as to the exact ownership of the soil upon which they are growing?
Lord STRABOLGI: Of course, my Lords. There are difficult border cases of this kind, and I will certainly put the points which the noble Lord has made, with all his great experience, to my right honourable friend.

PRINCESS ANNE: MESSAGES OF CONGRATULATION
Lord CARRINGTON: My Lords, with the leave of the House, may I ask the noble Lord the Leader of the House whether he will express the congratu-
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lations of your Lordships to Princess Anne and Captain Phillips on the birth of their son?
The LORD PRIVY SEAL (Lord Peart): My Lords, I am sure that the House will be happy to know that the Prime Minister conveyed a formal message to Princess Anne on behalf of the Government. I am sure, too, that the House will be pleased to know that, as Leader of the House, I have sent a message on behalf of the House to Princess Anne expressing our congratulations on the birth of her child.
Lord BYERS: My Lords, we on these Benches would like to be associated with those sentiments.

CONSERVATION OF WILD CREATURES AND WILD PLANTS (AMENDMENT) BILL [H.L.]
Lord AMULREE: My Lords, on behalf of the noble Earl, Lord Cranbrook, I beg to introduce a Bill to make further provision for the protection and conservation of wild creatures. I beg to move that this Bill be now read a first time.
Moved, That the Bill he now read 1a, —(Lord Amulree.)
On Question, Bill read 1a, and to be printed.

PROCEDURE OF THE HOUSE
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Select Committee on Procedure of the House be appointed; and that, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the Committee:

Ardwick, L.

Byers, L.

Carrington, L.

Cathcart, E.

Davies of Leek, L.

Denham, L.

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Drumalbyn, L.

Elwyn-Jones, L. (L. Chancellor)

Greenway, L.

Halsbury, E.

Henley, L.

Hylton-Foster, B.

Jacques, L.

Llewelyn-Davies of Hastoe, B.

Maybray-King, L.

Molson, L.

Morris of Borth-y-Gest, L.

Nugent of Guildford, L.

Peart, L. (L. Privy Seal)

Phillips, B.

St. Aldwyn, E.

Shackleton, L.

Strathcona and Mount Royal, L.

Terrington, L.

Wigoder, L.

—(Lord Aberdare.)
On Question, Motion agreed to.

PERSONAL BILLS
Lord ABERDARE: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That a Select Committee on Personal Bills be appointed, to which all Petitions for Personal Bills shall stand referred; and that, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the Commitee:

Airedale, L.

Bledisloe, V.

Cross of Chelsea, L.

Houghton of Sowerby, L.

Mansfield, E.

Wilberforce, L.

—(Lord Aberdare.)
On Question, Motion agreed to.

THE POST OFFICE
3.4 p.m.
Lord ORR-EWING Lord ORR-EWING rose to call attention to the Report of the Post Office Review Committee under the chairmanship of Mr. Carter (Cmnd. 6850), the Annual Report 1976–77 of the Post Office Users'
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National Council and the present performance of the Post Office as a public service; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. This is the Conservative Opposition's first Supply Day of the new Session. The very fact that we have chosen the Post Office shows how important we believe posts and telecommunications are to the efficiency and social life of our country.
I believe that this is a good report and that the House would wish me first to congratulate Professor Carter and his committee for the admirable work they have done. They started work in January 1976, they reported last July, and we are now debating their report only two Parliamentary weeks after it emerged. It is only right to say, as we have raised the subject, that we hope the Government will feel some sense of urgency about producing their recommendations and the action which will arise from this report.
This Government have now completed nearly four years in office and many reports are still awaiting action. In many cases they are not awaiting legislation but administrative action. The Radcliffe-Maud Report was published many years ago and laid before Parliament, and much about that report still needs to be done. I was a member of the Royal Commission on the Standard of Conduct in Public Life. That Commission reported more than nine months ago. We have had a small debate here, but on some very important areas no action has been taken. Perhaps the prize case is Lord Butler's report on mentally abnormal offenders. I see that this report is the subject of an Early Day Motion. That committee sat for three years and it reported three years ago, but absolutely nothing has happened. This represents a very strong discouragement to able and busy people to dedicate themselves to Government and national work of this importance. I hope the Government will bear in mind that if nothing is done as a result of Royal Commissions and carefully prepared reports it will undermine the whole principle of voluntary service, and this would not be in the best interests of Parliament.
We pride ourselves on making rather shorter speeches than they do in another

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place. I hope, therefore, to keep to 25 minutes, but in that time I could not possibly do justice to the whole spectrum which comes within the purview of the Post Office. At the end of my speech I intend to branch a little away from the subject because a passage in the Queen's Speech, to which we ought to give attention, states that the Government seek to provide the right of Post Office staff to take industrial action. This is a question of such urgency that I have given notice that I shall raise the matter.
As your Lordships' House knows, when speaking about the Post Office we are speaking about the biggest employer in the entire country, because it employs 420,000 people—made up of 175,000 on the postal side and 245,000 on the telecommunications side. I believe that the Government should now accept yet another recommendation to break this huge organisation into two separate corporations. There need to be two organisations for the following reasons. On the one side there is the long-established postal service—it is now almost 400 years old. That is a highly labour-intensive organisation. On the other side there is the fast expanding, highly technological, capital intensive telecommunications corporation which is an animal of a completely different type and which, I believe, would do better if it were in a separate organisation.
Most advanced industrial countries have separated their posts and telecommunications sides. This is true in the United States. It is also true in Japan, which the Carter Committee visited. It is true, too, in Sweden which has always been a very advanced telecommunications country. Australia is the latest country to come to the same conclusion. The Australians sent a committee of inquiry all round the free world to examine the pros and cons of running their posts and telecommunications either in harness or separately and they came to the conclusion, which so many others have also reached, that they would be better apart.
Most of us would agree that a staff of 420,000 is too big. I believe that 200,000 is too big, but at least it is better than a number double that size. Therefore I believe that we should endorse the Carter Committee's strong recommendation to split the two sides. At the same time we
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should encourage an increasing measure of decentralisation. I know that already in the 10 regions of the Post Office there is a goodish measure of decentralisation, but I believe that we need now to carry it into profit budgets, capital budgets and the like. In a monopoly situation one can check and monitor efficiency only by measuring in different areas performance against performance. If you can get figures which are accurate and helpful, you can measure whether in one region their administrative costs are too high, whether they are attracting new customers at the right rate, whether their efficiency is high, whether their installation costs are high or low. You can then measure those results against performance in another region. Equally, one can measure our international performance against the competitive nations of Western Europe and the Free World. In fact, the telecommunications side of the Post Office have been trying to do this.
Although there is much support for the splitting, I will readily concede that it will not be popular with the Union of Post Office Workers, under Mr. Tom Jackson. He has some 34,000 operators in the telecommunications side out of a total of 240,000 and, understandably, he feels that the Post Office Engineering Union will be a strong magnet and will eventually pressure his 34,000 into joining.
We have two very reasonable people at the head of our Post Office unions in Bryan Stanley of the engineers and Tom Jackson of the Post Office workers, and I cannot believe that we shall be held up or that it is impossible for two like-minded people to find some solution. The engineering union have already assured Tom Jackson that they will not poach but will abide by Bridlington and the like, but Mr. Jackson is rather more cynical and says that in 10 years' time the same promises may perhaps not be upheld. But I cannot think that we should back away from a logical conclusion because of this minor difficulty.
On the postal side, we all have complaints but, clearly, posts are going to be needed for many decades. It is difficult to get away from the fact that, in the end, the posts have to be delivered by hand on a complicated round and that is why the postal service is so labour intensive. I believe we should think

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about new ways of shortening the postman's job. Other nations have had to put their post boxes at the garden gate in suburban areas or at the bottom of blocks of flats in more intensively populated areas, and I cannot see why we should not do exactly the same here. Some time ago, the hope was held out that our posts would be quicker and perhaps even cheaper (some hope!) if we had automatic sorting. To that end, I remember some 20 years ago visiting Dollis Hill, which was close to my constituency. There, I examined the automatic machines which were being devised and developed. Unfortunately, this has come about all too slowly and for three years the unions would not accept the sorting machines in the 80 selectad offices. About 1975, however, a productivity settlement was made; but the bonuses could not be concentrated on those who were working the machines but had to be spread over the whole 175,000, so they were thinly spread and of course also very expensive in total. This was an added burden to the cost of mechanisation.
Your Lordships have read the Carter Report and will have seen that in Japan—and I think this can be found in paragraph 31 of chapter 10—letters are handled by a single machine. Here they go through the following stages in a sorting office: culling, facing, sorting by class, cancelling, coding, sorting by destination—six processes and presumably six extra people. All that of course adds to the time and, naturally, to the cost but the latest calculation is that, even if mechanical sorting was accepted tomorrow and was as efficient as it could possibly be, it would only save 6,000 jobs out of a total of 175,000. So do not let us think that this is a solution to the speeding up; it would certainly help but it would not solve the problem.
I also believe it is worth looking at the Carter recommendation that the letter tariff should be adjusted to give benefit when items which are posted can be automatically sorted. If there could be a financial incentive to do that, many businesses would take pains to have standard envelopes and zip codes which could be quickly used and which would be suitable for automatic sorting. Also the Mail Users' Association has recommended that there should be special tariffs for bulk traffic. They have pointed
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out that much time and money must be saved by the Post Office and suggest that an incentive might be given in that direction.
All these points should be approached with a flexibility of mind and I am afraid the underlying theme of this report is that the Post Office has become somewhat inflexible over the years. I hope that in the course of this debate someone else will deal with the subject of Sunday post because if I were to start on that argument I should not have time to deal with anything else, but it certainly needs to be aired in your Lordships' House.
The facts are that it was in 1972, just five years ago, that the number of telephone calls in a single year overtook the number of letters handled in a single year and thereafter the gap has widened. If your Lordships have children and grandchildren you will recognise that the habit of writing letters is rapidly dying, particularly among the younger generation. If they want to communicate with someone they pick up a telephone and as long as it is on their parents' bill they do not worry much about either the time of day at which they make the call or the length of the call. One thing they do not do is sit down and write a letter. If they did, it would be a greater chore and perhaps even more expensive; they might even have to buy the stamps themselves.
So, for admirable reasons, the telecommunications side is growing very rapidly, with existing new technologies making telephone calls relatively cheaper and more reliable. I was looking at the figures and found that in the last 10 years the number of telephones had gone up by 70 per cent. That is a tremendous expansion in a decade. The number of inland calls has increased by 93 per cent; in other words, it has almost doubled in 10 years. The next point is satisfactory because it has not happened everywhere in Britain. The increase in manpower on the telecommunications side is not 70 per cent nor 93 per cent. but 1·3 per cent, and I think the management of the Post Office and the Post Office Engineering Union should be congratulated on this matter.
The international business, by virtue of new technologies, cables, and satellites, has expanded tremendously. In 1969,

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only 30 per cent. of the subscribers in this country could dial international calls and then they could only deal with nine countries; today the figure is 75 per cent. with 54 countries. It is a vast expansion and it is reckoned that by 1981 all subscribers will be able to do international subscriber dialling.
Fortunately, the Post Office is one of the public industries which has never been starved of capital and I am glad to say that that goes for both Conservative and Labour Governments. If we look at the figures we find that in 1971 over £540 million was spent in capital expenditure and in 1976–77 the figure was £1,200 million. In real terms, that is not very different, but what is also important is that the Post Office should be allowed to generate enough profits to cover this capital expenditure from within and not have to go and borrow from without, otherwise it will be saddled with huge annual interest charges on the money which it is borrowing.
Even in our time, we have seen the change from the mechanical Strowger system, first to Crossbar and more recently to the electronic exchanges of TXE4. Looking further ahead, there is a great deal of effort towards another, even more improved, flexible and effective telephone system called System X. It is believed that this will meet our needs until not the 20th but the 21st century. Bearing in mind how long ago it was that Strowger invented his system—about 100 years ago—this is probably not a wrong deduction. Each year, new subscriber equipment is coming forward, both for business and for homes. Facsimile equipment is now becoming available; we have data processing equipment, word processing equipment and all that is reported on in the annual Post Office report. We are now entering into new technologies which are tremendously exciting to myself and other engineers—the digital technology, large-scale integrated circuits, and the optical fibre technology, which holds enormous scope for trunk cable development and for carrying many circuits down a simple optical fibre. So there is terrific scope.
How should we control this huge business of £3·8 billion turnover in a year, with 420,000 employees? I suggest, first, that we need to look at the strength of
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certain aspects of the Post Office Board. There are six independent members on the Board, but it is not easy to make optimum use of amateurs among professionals. I understand that they normally get their Post Office agenda papers, about 8 cm. thick, on Fridays when the Post Office Board meets on the following Monday. I do not know who is going to read that thickness of paper over the weekends before Board meetings. I doubt whether that helps to make these public spirited people as effective as they could be. I also note that there are not many qualified engineers on the Board, and there is no financial controller sitting on that Board.
I think the retirement of Sir Edward Fennessy who was in charge as Managing Director (Telecommunications), and was a trained engineer, has weakened the engineering knowledge on that Board. Certainly they will miss his drive, and I understand that no direct replacement is intended. I think it is equally serious that the position of Board member for finance was left vacant for a year and a half. No one came forward; they could not attract anyone. Eventually they did attract Mr. Elderfield and he served for one year, but then he was tempted to go back into industry where he could be more effective and better paid. So the Post Office has been without a full-time finance member on its Board since December 1976 and it simply cannot attract anybody to do that job. One wonders whether Sir Harold Wilson's decision to refuse to implement the recommendations of Lord Boyle's Committee on the salaries in the public sector is not a strong contributory factor. If we are holding down the rewards to these people, we cannot get the best people, and we need them in a business of this size and this importance.
Further down, if one looks at page 40 of this report, one sees that there are 21 qualified accountants in the contracts department which is responsible for purchasing £1,000 million worth each year. That leaves 33 qualified accountants to look after the whole of the rest of the Post Office business. I cannot believe that this makes for good financial control at all levels. This means £3·8 billion turnover in a single year looked after by 33 qualified accountants.
It is recommended that the Secretary of State should set up a council. Under the Carter recommendations it is to be called

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the Council on Post Office and Telecommunications Affairs. He visualises that this should be a powerful independent body with the duty to advise Ministers, the power to mount their own investigations, and the power to publish their own reports. I should like to hear the discussion before I come down on either side with regard to this proposal. Certainly I should like at this stage to pay credit to Lord Peddie's committee, the Post Office Users' National Council, which has done marvellous work looking after the interests of the consumer and prodding the Post Office to take action. I think we are all grateful to Lord Peddie for what he has done in chairing that committee. But I still wonder whether by having another monitor on top of the Post Office Board we are going to effect the cure we hope for. You can pile monitors on monitors and watchdogs on watchdogs, but in the end it depends on the calibre of the people who are managing; all these others are likely to be amateurs compared with the pros, and it is very difficult to beat the pros with a series of amateurs, however dedicated and efficient they are.
In the last few minutes I wish to deal with what I believe to be a rather worrying sentence in the gracious Speech, where it says, talking about measures:
"These measures include … the right of Post Office staff to take industrial action".
It has always been in the Post Office Acts that it is an offence to impede the transmission of the mail, and then, arising out of the mail, of telephone calls. This was repeated in the 1969 Act. When there was a threat by the unions to exert their own sanctions against South Africa last year—the Union of Post Office Workers and the Post Office Engineering Union—they thought about this matter very carefully, and the latter did in fact strike for a few days. But immediately an action was brought for an injunction by Mr. Gouriet the unions quickly abandoned their intentions.
Now, in the Queen's Speech, it looks as if we are to have a measure which will allow them to take industrial action. I do ask the Government before they implement this to consider desperately carefully the possible repercussions. In a single day the mail could be stopped, but it could also be stopped not on a universal but on a selective basis, as they
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did with Grunwick. They could stop the mail going to some area they disapproved of or to some organisation they disapproved of. In the case of Grunwick it was a fairly blunt instrument because 100,000 residents also suffered, all those who live around Grunwick, and all the businesses around Grunwick. There was not much support for this, I am glad to say; I believe there was not much support from the union headquarters because of the legal implications which are at present enshrined in the Act.
If there was a strike, immediately all telephone calls through an operator would stop, and this would include police, emergency calls, hospital calls, anything urgent, and 30 per cent. incidentally of the international calls go through operators. All that would stop. Immediately sound and television networks would be affected, and you could broadcast only what was created on the spot and nothing could come from remote studios. Is this really the sort of weapon we wish to place in other peoples' hands? Progressively the curtailment of engineering services, as equipment went out of order and needed attention, would affect the whole of our automatic telephones. Our newspapers would be very quickly affected, because they get most of their news on telephones or TELEX: all that would stop. Is this really what a Government dedicated to democracy and to keeping our nation intact want to bring about? Perhaps even more vicious is the belief that if this was enacted they could choose which organisations they acted against and which they did not act against.
I raise this at the end of my speech because it has appeared since I tabled my Motion. I think it is of such importance that I would urge the Government to think most carefully whether this is necessary. It is said (I do not know whether or not rightly) that Mr. Kaufman, the Minister of State at the Department of Industry—the Department which now has responsibility for the Post Office, is behind much of this. If that is true, I hope the more moderate characters in the Government will persuade him not to pursue this issue, because it could be desperately serious for our country.
After this debate, I hope the message will go out that the Post Office must avoid all complacency; it must remain rather

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more flexible than it has been of late. We acknowledge that there are many genuine grievances concerning both the post and the telephones. However, we have potentially a first-rate organisation in the Post Office and we should give it every chance, by implementing some of the recommendations of these important committees, to drag itself into the most up-to-date and competitive position of any Post Office in the world. It could do it. It has the potential, so let us encourage it to do so. My Lords, I beg to move for Papers.
3.30 p.m.
The Earl of KIMBERLEY: My Lords, I am sure that all noble Lords in this Chamber as well as the general public will be extremely grateful to the noble Lord, Lord Orr-Ewing, for calling attention to this matter this afternoon. I should also like to thank the noble Baroness, Lady Burton of Coventry, for sending me a great deal of very good information from the Association of Mail Order Publishers. I have no intention of using that information because the noble Baroness is due to speak immediately after me and I do not wish to steal any of her thunder.
My Lords, one needs to be constructive. In many respects the Post Office does a good job, but in others it could, as we all know, do better. The Carter Report stated that it
"intended to encourage improvement, but not to threaten or disrupt the many things which are already good".
It is in that spirit that I shall make my comments. On 20th April, I had the somewhat daunting task, because I drew the short straw, of discussing the whole of the operations of the Post Office. Today, I shall concentrate on three topics in particular: services, industrial relations and overseas mail.
As regards the standard of service that we receive, I am sorry to say that most people will agree that over the years it has declined, but it may be better than folklore would have it. We remember the relatively few letters which fail to arrive on time, while forgetting the very much greater number which do arrive on time. However, I have in my possession a letter which I personally posted.
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It was franked at 2 o'clock in Swindon on the 1st November. I was sitting with my solicitor on the 3rd November—two days later—at 3 o'clock in the afternoon and that letter arrived after I had arrived. Therefore, it took over two days to get from Swindon to London first-class. I asked my lawyer whether this happened often and he said that it happened frequently. So, that is the type of letter that we remember, but we forget the ones that arrive on time.
When all due allowance has been made, the standard of mail service is not as good as it used to be. In fact, the standard of' service actually offered has steadily declined throughout the last decade. However, that is not apparent from the figures published by the Post Office. I hope that the Government have taken particular note of the Carter Report and especially what it says on page 50, a summary of which is as follows:
"…on the postal side the standards used are to some extent 'self-adjusting' in that they measure performance against what the Post Office sets out to achieve rather than what its customers may be expecting. Thus, for example, when Sunday collections were abolished and first class letters posted between Saturday lunch-time and Sunday afternoon were delayed by 24 hours, the effect on the quality of service as measured by the Post Office was nil … It really does not help the public image of the Post Office when the organisation appears to be manipulating the figures to the extent that a deliberate and obvious worsening in the quality of service given in practice to customers, such as the abolition of Sunday collection or the withdrawal of late evening collections, has had no effect whatever on the quality of service recorded.".
My Lords, I refer next to one of the POUNC reports about the abolition of Sunday collections and the reduction of late evening collections. We find that such actions would have an effect on the quality of service given to first-class letters of about 9 per cent. in delay. In the 1976–77 Post Office Annual Report it was claimed:
"with nearly 93 per cent. of first-class letters delivered on the first working day after collection, first-class delivery standards are now higher than for some years past.".
However, if that is adjusted to allow for service reductions, the figure becomes 85 per cent., which is far worse than in the two years following the 1971 strike. When he replies to the debate perhaps the noble Lord will give some service statistics since 1969 which are adjusted so that one year is comparable with another. Will the

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noble Lord also assure us that, in future, the Post Office will produce figures which are comparable and that, in its White Paper, it will take particular note of paragraphs 6.24 to 6.28 of the Post Office Review Council's report? I have the report here in my possession, but there is no need for me to go into it now.
I turn next to the service required. The need for a good quality of service is obviously most important. There are two requirements: First, for first-class letters to be delivered quickly, that is, the day after posting, by the first post; secondly, for a high degree of reliability. That applies to the private individual as well as to the business user. Preliminary results of a recent survey conducted by the Mail Users' Association reveal that 92 per cent. of firms surveyed rated the delivery of first-class mail as very important. In the Association's survey last year reliability of service revealed a similarly high rating. I have that survey in my possession, and if any noble Lord wishes to see it I shall be happy to show it to him after the debate.
Strangely enough, the demand for a Sunday service is not as high as one might expect. In fact, in the Mail Users' Association survey it was revealed that only 21 per cent. stated that it had had a very considerable effect on their organisations. However, 62 per cent. all told still would have liked a Sunday service. Indeed, 21 per cent. may not be a sufficient indication to justify a full restoration, but surely it is sufficiently high to justify a partial service.
Still on the subject of Sunday services, it is rather like getting blood out of a stone because, finally, as a result of nagging people last April, I received a letter from the managing director of the Post Office about Sunday collections. I think that it would be of interest if I read out the relevant passage. The letter deals with:
"publicity for the remaining Sunday collection facilities and bulk postings on Sundays".
He then says:
"It took a little time to establish the background to the criticisms you were making.".
This letter was written on the 2nd June, but I made my speech on the 20th April. It goes on:
"You are asking whether we can provide a central list of the remaining facilities for posting
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on Sunday night. It would not be practicable to provide a comprehensive list. I am enclosing a note of the facilities which are available in Central London."
—it is three pages—
"As you see, it takes three pages to describe them. A national list would be too expensive to compile, too bulky to be useful and too difficult to keep up to date—especially as we are currently examining the scope for improvements. Customers will be interested only in the facilities for posting in their local cities and towns. The information is usually displayed on window notices beside sorting office boxes and will be made available to local news media from time to time. In case of doubt head postmasters will be glad to provide information to those who ask".
I do not think that that is good enough for the general public. It took me two and a half months to find that out and I reckon that the majority of people in this country still do not know that they can post a letter on Sunday somewhere.
I turn to cost reduction. Although there has been an extensive service reduction of which some details were given in the debate on 20th April, what emerges from the Carter Report is that these service reductions have not been met with corresponding savings. The report revealed a 12 per cent. fall in the rate of sorting mail and the Post Office's evidence on productivity that overall declines in output were at 11 per cent. over the years 1965–1976. Are the Government satisfied with that level of performance?
I turn to my second point concerning industrial relations, on which the noble Lord, Lord Orr-Ewing, put the case very succinctly. I was as surprised as he was to hear in the gracious Speech that the Government proposed to amend the Post Office Act to make it easier for Post Office employees to go on strike. Why did not the Government seek the views of the Carter Committee on this?
Another major omission from the Post Office Annual Report is a list of industrial action taken and working days cost. This year the Post Office has been subject to sporadic, but highly disruptive, industrial action, or the unnerving threat of it. To the best of my knowledge there have been disruptions in East London and Western District Office. These had severe effects on the service. Could the Minister provide a list of the main forms of industrial action taken this year and their effects, and how they compare with the situation in previous years?

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The Carter Report also stated:
"Part of the reason for the recent sharp rise in postal rates is a fall in labour productivity, over a period in which mechanisation should have begun to yield significant improvements. The public has a right to say, both to Post Office management and to the unions, that this is not good enough."
Does the Minister agree with that and, if so, what will be done to put it right? It would also be interesting to hear from the noble Lord what the main restrictive practices are which result in such a low level of productivity. In his summary could he outline them and some proposals for sweeping them away?
Finally, on industrial relations, I am given to understand that the unions have placed an embargo on graduate recruitment and will not accept "A" level entrants into head post offices. Is that true and, if so, will the Minister say how the Post Office is to build a hard core of management talent? Does he think it fair that well-qualified school leavers and graduates should be denied this form of employment when unemployment among the young is a particular cause for concern?
Lastly, I turn to overseas mails, on which the Post Office Review Committee said very little, but the 1976–77 Annual Report was not available to them when they reported. It reveals that Posts is making excessive profits on its overseas services. I believe that is because the target for the business is 2 per cent., yet on overseas services the profit is actually 8·3 per cent. Therefore, is it right that exporters should be burdened with being overcharged to make good the inefficiencies on the inland side? No mention was made of developing countries to lessen this imbalance of payment. Much of the increases in cost on overseas mail can be attributed to these charges. As most noble Lords will know, imbalance payments are the payments made by one country to another when it sends out more than it receives.
Before I conclude I should like to say a few words on behalf of the National Book League. Overseas mail prices fall particularly heavily on the publishing and book trade, as many overseas competitors have special rates for books and we do not. I also wish to mention the pension fund on which I believe the noble Lord, Lord Camoys, will speak at great
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length. Will the Government re-examine the Post Office Pension Fund deficiency which occurred as a result of the way in which the fund was set up in 1969? It seems unfair on the Post Office and its customers that it should be made to pay for what at the time was a Government error.
In conclusion, I would say that the Carter Report is to be welcomed. Its recommendations are imaginative and constructive. I sincerely hope, as I am sure most of us do, that we can look forward to a Government White Paper which will have some clear and positive proposals for action and which we all hope will be published no later than next Easter.
3.45 p.m.
Baroness BURTON of COVENTRY: My Lords, obviously one would wish to thank or congratulate the noble Lord, Lord Orr-Ewing, for having secured this debate. However, additionally, I should like to congratulate him on his speech. It seems to me most valuable and, as one who has no particular expertise—I do not know whether one says on the electronics side—as he has on this matter, I believe it was a most excellent foundation and I hope that much good comes from his remarks. The noble Lord mentioned the need for urgency and POUNC, and I should like to come to those later in my remarks. I know that the noble Earl, Lord Kimberley, will agree with me about the necessity for customers receiving better information. I shall also deal with that later on.
At the outset of my remarks, like both noble Lords who have already spoken, I should like to compliment Mr. Carter and his colleagues on an outstanding piece of work. To me this was not only of unusual quality—and we in Parliament have the opportunity of studying many reports—but it was refreshing. I feel very strongly that we need refreshing in this particular area.
However, today I want to divide my remarks into two main sections and for the second one I shall have an interest to declare. But for the first section I have taken a text from page 42, paragraph 6.2, of the Carter Report. It reads:
"From the evidence we have seen and heard we fear the Post Office knows too little about its customers."

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I propose to take five simple examples—examples which to my mind do not call for high intelligence but common sense. First, certainly the Post Office knows too little about us. But what seems to me to be more serious is that the Corporation gives the impression that it does not want to know. This is not only infuriating but bad public relations. I wish that these large organisations could bring themselves to realise that customers have suggestions to make and that they do not always want to complain. I maintain that surely users of services are the best people to offer suggestions.
Secondly, we, the public, remember—and I am sure the Post Office does too—the stupid publicity attendant on the introduction of the two-tier letter system, since when deliveries have steadily deteriorated. Thirdly, we then had the suspension—or should we now say the removal?—of Sunday collections. My information was that this affected about one-fifth of the public who posted some six million letters on Sundays. The Post Office estimated that this would save some £9 million annually and slipped out the news along with its request to the Price Commission for a ½p increase—to 7p and 9p—in the price of second and first class stamps. It seemed to me then, and still does, that the policy of the Post Office when receipts fall is always to increase the price rather than to improve the service. It was with regret that I reached this conclusion, but it was borne out time and time again. Obviously it was not an opinion confined to myself.
As recently as 13th June last Mr. Tom Jackson, speaking at a lunch, said it (being the Post Office) had a management which,
"Whenever the Post Office got financial cramp reached for two bottles of medicines from the shelf: one labelled 'cuts in services ', the other ' increased prices ', and had never sat down and asked itself How can we meet the needs of the community? And how can we meet developing needs and at the same time make a profit?"
My fourth point, codes. What about codes? Are these really going to work? I believe that the jumble of letters and numbers will make the task of postmen much more difficult. Europeans have simpler codes than we are supposed to use, and when I was visiting friends in America earlier this year I found out
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how much they appreciate their easy zip codes. And what impressed me was that everybody used them, and it was absolute heresy to think that anybody would not. I wonder whether the Minister, when he comes to reply—and this is a real request for information—could say why our codes are so complicated.
The last of my five examples: how much goodwill did the Post Office throw away in 1975 over the refusal to have a cheaper stamp for Christmas? I do not suppose it has any idea. But, my Lords, from the Answers given me in this House I did not think it cared. And so we could go on. Simple everyday matters for the general public, but the Corporation gives the impression that it is not prepared to discuss them. I feel strongly on this, as the House knows. More and more, with these huge organisations, the users—the consumers—the customers who, after all, provide the money, count for less and less. Let us hope that Sir William Barlow will reverse this trend or, at least, will see the necessity of reversing it.
This brings me to the second section of my remarks—to a continuation of the same text, and with an interest to declare. This is, as I think the House knows, that I am President of the Association of Mail Order Publishers. My text continues at page 42 with the same paragraph 6–2:
"The Post Office is very short of published customer-based service standards; it does not have the market research tools or information which we believe it needs to determine—and to demonstrate how it has determined — the levels of service its customers require and for which they will be willing to pay or to offer extra traffic".
This text is particularly apt for my Association.
If we go back to the debate initiated in this House by the noble Lord, Lord Beaumont of Whitley, on 19th March 1975, concern was expressed over the effect of these swingeing tariff increases on the printed word. What was said then is equally true today. Everyone, except those in the Post Office, was aware that the Post Office was in danger of pricing its services at a level which would diminish demand. At the time of the debate in the House, one economic fact was starkly clear, and the noble Lord, Lord Orr-Ewing, has already hinted at this. The Post Office was—and is—almost uniquely labour intensive. It has huge fixed costs, largely

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independent of the volume of postal traffic it handles. Maintaining, and even increasing, traffic was—and is—therefore vital to its economic wellbeing. In our debate we warned that business users were highly sensitive to tariffs: that unacceptable price increases had, and would, result in fewer items being posted; and that this, because of the huge fixed costs I have mentioned, would increase the costs attributable to the remaining units and hence make the demand for further tariff increases inevitable.
It was the fulfilment of this prophesy from all of us who spoke in that debate that hastened the appointment of the Carter Committee. Traffic has been sharply cut, and services have been reduced (for relatively small savings) to a level that I believe is unacceptable to the public. At the time of our debate on the printed word, we warned simply that higher prices meant lower traffic. Things have turned out even worse. Higher prices and reduced services meant not merely lower volume but increasing public disquiet: in its report for 1976/77 POUNC recorded an almost 100 per cent. increase in complaints, and I should like to supplement what the noble Lord, Lord Orr-Ewing, said about POUNC. As my noble friend Lord Peddle knows, many is the time I have stood in this House and held up his Committee as the model for all consumer committees. I think they have done a wonderful job, and when my noble friend Lord Peddie complains that they have not got enough influence I think it is a bad state of affairs. I still think it is the best consumer committee we have got; thanks to him this has come about and I hope that other consumer committees will be equally effective, and, in view of what he has said, more effective even than he has been able to be.
The Post Office appeared to have no appreciation of marginal costing, and of the use to which it should have been put to attract traffic from business users, whose demand for postal services has been shown to be so price-sensitive (or "elastic", as my economist friends put it). Sadly, this failure also communicated itself to the Minister of State responsible for the Post Office. Only this year he responded to this point by treating it as a plea that business should be subsidised by the private user of the posts.
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One has to go on a long time—and your Lordships know I am prepared to go on indefinitely—in removing false impressions. I shall have another go at removing this one. The reverse is the truth and this canard must be interred once and for all. Indeed, having said all those nice things about my noble friend Lord Peddie, I can do no better than to quote two striking passages in successive POUNC reports in 1975.
"The great majority of posts in the Second Class stream is business mail, which is price sensitive … POUNC considers it vital that postal traffic losses, which could be irrecoverable, should be avoided."
That was their Report No. 12 in August 1975, paragraph 36(b). The other:
"Without large user business the finances of the postal service would be even less healthy and the burden falling upon the small business user and the private user proportionately greater.".
That was from Report No. 11, January 1975, paragraph 32. Indeed, I can think of no other area where the interests of business and the ordinary consumer more precisely coincide. The Carter Committee authoritatively endorses that view. It also devastatingly summarises what many of us have felt in our attempts to deal with the Post Office. I imagine many of your Lordships who have studied the report will have noticed this remark which also appears on page 42:
"Sometimes its customers get the feeling that they are graciously being permitted to use the systems.".
Almost coincidental with the publication of the report there were senior managerial changes in the Post Office. Will they turn out to be new brooms or will they be only feather dusters? Perhaps the views expressed in this debate can help to ensure that they will prove to be the former.
It is immensely important to note, as many noble Lords will have noted, that with just two major exceptions the recommendations contained in the Carter Report could be implemented at once by the Post Office's new management, and I am really back to what the noble Lord, Lord Orr-Ewing, said. There is no excuse at all to await debates in Parliament or for Ministers to defer decisions. If we can remove that from my noble friend Lord Winterbottom before he replies to the debate, that will be of the greatest help.

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The two major exceptions that we cannot do anything about at the moment are those to split the Corporation cleanly into two divisions, posts and telecommunications, for which compelling reasons are given in the report, and the Committee's ingenious proposals for dealing with the unacceptable burden of the pensions deficit on current users. Important as debate and resolution of these two issues are, they must not be allowed to be used as excuses for deferring action on the other recommendations, and I add my plea to that of Lord Orr-Ewing on this and hope that every other noble Lord will do the same.
To me, the most pressing of the recommendations with which we could deal quickly are four: first, the development of a comprehensive marketing strategy to reverse the decline in traffic; secondly, the bold utilisation of marginal costing in the winning of new traffic; thirdly, the conduct of adequate market research to identify customer needs and possible areas of new business; and fourthly, the publication of more frequent, more comprehensive and more consumer-orientated quality-of-service statistics. These four recommendations were the reasons for my choosing as my text page 42, paragraph 6.2, and as I have mentioned that several times I am sure that my noble friend Lord Winterbottom will have noted the page and the paragraph.
Mr. Carter and his colleagues have done us all a great service. The least we can do is to see that their recommendations do not disappear into Whitehall cupboards. Lord Orr-Ewing has done his part in giving us this debate. Noble Lords in every part of the House have an opportunity to join in and I hope that the debate will be heard well beyond this Chamber; I hope that it will at least be heard by those who, I trust, will be the new brooms in Howland Street and St. Martin's-leGrand.
Lord ROCHESTER: My Lords, will the noble Baroness accept, in relation to her earlier remarks about large organisations, that there are many such organisations in the competitive private sector which are obliged to meet the needs of their customers, for if they did not they would have to go out of business?
Baroness BURTON of COVENTRY: Yes, of course, my Lords.
4.5 p.m.
Lord TORPHICHEN: My Lords, when I first arrived here I asked rather naively whether one should limit one's remarks to the things one knew something about and the slightly irreverent reply I got was to the contrary. Nevertheless, I shall stay on safe ground today and talk of something about which I know a little. To earn my living outside this place, I design a type of specialised component which goes into some types of Post Office transmission equipment and I know a little, though not all, about the mechanical operation of the Post Office network.
I wish to draw attention to paragraph 63 in the conclusions of Mr. Carter's Report, which suggests very mildly that the present limits of the Post Office monopoly in the telecommunications division—and, as I say, the report is very mild in the way it is worded on this—could be altered to advantage. I would go further than that. There are many possible services for both domestic subscribers and businesses which are too diverse or which have still to be invented or developed and which the Post Office, because it has a limited research and development organisation, cannot necessarily supply. In fact, the restrictions on connections and equipment to the Post Office network, though they do not forbid or totally prevent outside firms from supplying such equipment, make it sufficiently difficult and many possible applications are simply not supplied because, for instance, they would not support a company or operation large enough to comply with the Post Office regulation that any company supplying equipment for attachment to Post Office lines cannot sell it to the consumer but must rent it.
If the limits of the Post Office monopoly in telecommunications were to be altered or cut back at all, then obviously there would be some objections; the Post Office workers would perhaps feel that their livelihood was threatened by a reduction in their monopoly. I suggest that they should not worry about this. Whenever I have seen a company with a number of telephone lines used for telephone communications install in their premises something like a computer with attachment to a telephone line, it is always a new telephone line that is put in especially for the computer; the computer does not

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cut down on the amount of usage of the telephone system in that company but in fact tends to increase it, so I do not think the unions need fear any reduction in their security if the Post Office monopoly is reduced in a small way.
There are technical objections to having a free-for-all in what one can attach to the telephone system. However, purely physical damage can be avoided by specifying what types of component may be attached to the lines: the regulations for this are quite well specified and are already satisfactory. The deliberate misuse of equipment attached to a Post Office line could be deleterious to the service by tying up the system or by attempting to scramble the switch network, or one could perfectly well attach a computer to a telephone line to make something like automated nuisance calls, but in both those cases the offence is not related to the type of equipment that is attached to the telephone system; it is more the use to which it is put. In fact, one could draw up suitable regulations to prevent such abuses.
The report was very timid in merely suggesting, at paragraph 63, a single way in which the monopoly powers might be altered and some freedom introduced into the way that equipment is supplied to the subscriber, so as to allow outside firms to compete. I agree with this view wholeheartedly, and I suggest that further action could be taken on this point.
4.11 p.m.
Lord WALL: My Lords, it is perhaps appropriate that a relatively new Member of your Lordships' House should have the privilege of congratulating the noble Lord on his first speech before us. I know how he felt when he rose to his feet. I congratulate him on choosing a subject which is very near to all our hearts, and we look forward very much to hearing more from him. I also wish to thank the noble Lord, Lord Orr-Ewing, for making it possible to debate the long-awaited Carter Report at this early stage. When I had the opportunity to speak in the pre-Carter debate, opened by the noble Earl, Lord Kimberley, seven months ago, I declared my special interest in the Post Office. In 1966, I was lent to the Post Office for two years to help in the transformation of the
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Post Office from a 300 year-old Government Department to a public corporation. I then developed an affection for the Post Office which has not diminished with the years.
On that occasion I expressed the opinion that, despite widespread criticism, the total performance of the Post Office Corporation since its inception had been most creditable, but I wondered what Carter would say. What the report says, on pages 4 and 5, is:
"The efficiency of telecommunications services has considerably improved in recent years ….
It also says that the
"… record in telecommunications deserves responsible criticism, but not the exercise of our national habit of condemning all things British as though they were the worst in the world.
"The same is true for posts … as far as we can find out few, if any, countries have a postal service better than ours …"
The praise may be faint here and there, but praise it is, and well deserved.
On the previous occasion I touched briefly on some of the management problems of the Post Office: its size, diversity, monopoly and its regulation; and on relationships. I am going to do so again today, and I apologise to your Lordships if I repeat myself, but seven months is a short time in which to make basic changes in one's views or one's prejudices. In addition, I also want to comment briefly on the pensions problem. I should also say that, from the outset, I found the Carter Report a most excellent report. I hope that other State monopolies will be reviewed in a like way. The report and its appendix are full of useful information and opinion.
It is now generally accepted, at least in industry, that size creates serious problems of management and of organisation, and that these problems can only too easily offset the benefits of economies of scale. Briefly, it looks as if large companies are more prone than smaller companies to be complacent, inward-looking, set in their ways, resistant to change, and reluctant to take risks. This resistance to change often takes the form of saying, "Well, we have always done it that way"; and if it does not succeed, then, "Anyway, we are different." My Lords, I urge you to read some of the evidence given to the Carter Committee, and you will see what I mean. Management has to spend much

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time trying to overcome these problems, and it is not easy to do so. I speak as someone who has spent most of his working life in the management of large organisations such as the Ministry of Food, Unilever, EMI, the Post Office and ICL. I am now concerned only with medium sized companies, and I see the difference.
These problems of size do not apply only to large private sector companies. They apply equally, or perhaps even more so, to Government Departments, local authorities, nationalised industries, political Parties and trade unions. For example, how does one manage an organisation which claims more than two million members Let me make it clear that I do not belong to the "small is beautiful" school of management. That can be just as dangerous a generalisation as "big is bad". What I do believe, however, is that, if it is not necessary to be big, it is necessary not to be big; and I hope that Lord Melbourne is not rotating too rapidly in his grave.
The classical way of tackling these size problems in industry is by the maximum delegation of responsibility and authority, by hiving off units before they become too big, by setting up cost and profit centres to monitor performance against targets, and by regular reviews of the entire organisation. As I said before, these solutions are not readily open to the Post Office. For example, the main element in costs—wages—is fixed nationally. Prices are also fixed nationally and uniformly, despite wide variations in real costs. For example, I recall that in 1967 the cost of handling and delivering a letter posted in London was 3½ old pence, whereas a letter posted in London and delivered in the Orkneys cost 21/-.
What I, like the noble Lord, Lord Orr-Ewing, support are the proposals in the Carter Report which seek to lay down management principles, including responsibility accounting, better cost information, better monitoring of performance at lower management levels, and so on. It will be difficult, but it will be well worth trying.
I now turn to diversity. Your Lordships will remember that some years ago there was a fashion in diversification, especially in the United States and in this country. The so-called conglomerates
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were formed on the argument that, given money and management, one could put anything together without regard to industrial logic or common sense. The fashion has changed, and a number of conglomerates, or rather their work force and their shareholders, have had most unfortunate experiences. Turning again to Lord Melbourne, I should say that if it is not necessary to diversify, it is necessary not to diversify. The Post Office is both large and diverse, and in my opinion no management principles, however worthy, can overcome the real disadvantages of size and diversity.
All this leads me, inevitably, to the major issue in the Carter Report: should the Post Office be split into two separate corporations? My views on this matter were made clear to your Lordships several months ago. I strongly favour an early split. I was, of course, delighted to read that the Carter Committee had reached the same conclusion. The Committee had very powerful support from the Post Office itself; and this surely is of the highest importance. I quote:
"…the 1967 arguments for a single authority are not compelling today … the time has come to separate the Post Office formally into a telecommunications authority and a postal authority."
That is an extract from Post Office evidence; it appears on page 13, paragraph 5.7.1. of the appendix to the report. The Committee had equally firm support from the Post Office Engineering Union, and from the Civil and Public Services Association.
Against the split are ranged the Union of Post Office Workers (largely on the grounds of added cost and duplication of services), the Society of Civil and Public Servants, and the Post Office Users' National Council. But I should like to point out that the latter two organisations recommend a dramatic change in the structure of the Post Office and, in particular, separate executive boards for the two main businesses. I think that this rather gives the game away. It is a case of a rose by any other name—it is still a split. This leaves the Union of Post Office Workers on its own.
Like the noble Lord, Lord Orr-Ewing, I understand Mr. Tom Jackson's problem, and I have a high regard for him. For example, there are the lady telephone operators who are in his union; there are

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still many of them. But the case on cost and duplication is weak. The improvement in efficiency which would follow from the split would easily offset those points. I assure Mr. Jackson that, rather like a cold shower, once you get over the shock you feel much better. And let us be clear: even after the split the two Corporations will remain very large indeed, and management will still have its time cut out to keep them lively and to keep them efficient.
Since there is so much controversy on this question, perhaps I may, at the risk of boring your Lordships, rehearse what I regard as the real arguments for splitting, and splitting quickly. The two businesses differ fundamentally. Of course they are both concerned with communications, but so are newspapers, book publishers and television companies. Post is a public service, telecommunications is a public utility; and this, in my view, is the fundamental difference. Post is contracting (the volume is about the same as it was 40 years ago): telecommunications is expanding (it roughly doubles itself every eight years). Post can never be run commercially: telecommunications must be run commercially if it is to give us the service we need. Thus, history remains the only common link. So let each organisation do its best in its own way. Posts may well have to be supported financially if the services are to be maintained. So be it. But let us not confuse this issue by cross-subsidisation, which conceals the real facts. That way is wrong for the Post Office and wrong for the country. I believe that leaving things as they are will inevitably continue the cross-subsidisation which undoubtedly exists and which could easily get worse as posts go on declining and telecommunications go on expanding.
I now turn to the question of monopoly, and its regulation. Here, I must say, I find the report disappointing. I should have liked to have seen a real discussion of the obligations of a State monopoly to the community; not just to the workforce but to the customers and to the suppliers. It is vital, in my opinion, that all State monopolies should have definite obligations clearly spelled out, and the way in which these obligations are carried out in practice should be under regular review. For example,
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the right to strike is relevant here. Once again we have that accounting curiosity, the one-sided balance sheet. These days, everybody seems to have rights and very few to have obligations. This leads me directly to the regulation of the Post Office monopolies. Fortunately, Carter does not propose to change these two main monopolies. This must be right; but it makes it essential to review the regulation of the monopolies.
On the previous occasion I suggested that we ought to study the way in which the huge private telephone monopolies are regulated by the Federal Communications Commission in the United States. There, regulation is concentrated and clear: in this country, regulation is diffused and unclear. Carter recommends a single council on postal and telecommunications affairs, but this is purely advisory and is concerned largely with monitoring performance. It will do nothing to reduce potential political pressure on the Post Office, whereas what we need, certainly for telecommunications, is the minimum of political interference with the sound commercial conduct of the business. Perhaps one day we shall really examine the problem of regulation of monopolies and find a much better answer than we have today.
Next, relationships. I will confine myself to relationships with the suppliers, though I should dearly have liked to have talked about relationships with the workforce. The Carter Report has one sentence of profound importance which cannot be repeated too often:
"… the United Kingdom already has too few successful and technologically advanced industries, and certainly cannot afford to take a dependent place in telecommunications manufacture."
That is paragraph 12.22. But the report ought to have gone on to say that it is becoming increasingly difficult to separate the telecommunications, the electronics and the computer industries. They are really one, great, developing industry which we must cherish in every possible way. We simply must not be dependent on anyone else for any part of this vast industry. If telecommunications manufacture is weak, it damages the whole industry; and this is equally true for computers and for electronics. Just look at our almost complete dependence on others for semi-conductors and for silicon. This is a grave weakness, and the Post

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Office has a real responsibility for helping these vital industries to stay ahead of the game.
There has been much criticism of the Post Office and our telephone switching systems. These days we are all expert on TXE4 and System X. I commend this section of the report to your Lordships: it is Chapter 12. In the briefest summary, it fully supports stored programme control and System X, which it rightly describes as "ambitious but sound". It also rejects the absurd claim that the Post Office spends too much money on research and development; and it comes down flatfooted against the union proposal that the Post Office itself should get into major manufacture in competition with its own suppliers. But it also recommends a fresh look at the Post Office attitude towards subscribers' apparatus. Our American friends went through this 15 years ago with the famous Carterphone case. I support this: we should look again at subscribers' apparatus in the light of American experience. But what we must avoid at all cost is the creaming off of parts of the telecommunications business, which in my view has undoubtedy happened in the United States; for example, data transmission systems.
Lastly, my Lords, pensions. I raise this matter because I was, I fear, largely instrumental in urging the Post Office Corporation to go into contributory pension schemes. I happen to have a dislike of non-contributory pension schemes because in real life it is not a good thing to give people, or to appear to give them, something for nothing. As the report says, this is a "confused and sorry story". The Post Office and the Government have got into a stupid and unnecessary controversy. Both sides, says the report, are wrong. This is good stuff.
The Carter recommendations on pensions deserve our full support, although in my view they go far beyond the Post Office into that jungle of problems of occupational pensions schemes in times of rapid inflation. Indeed, the whole question of partial funding of pension schemes badly needs new and unprejudiced discussion. But I put it to my noble friends on the Front Bench: I wonder whether the Government realise the widespread apprehension which exists throughout the
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Post Office about pensions. There is a general fear that if we fall on hard times again pensions will suffer in the financial restraint which would follow. These apprehensions must be removed, and they can be removed only by a clear statement by the Government backed up by a guarantee. I ask the Government to tell the Treasury to stop the argument and to give the guarantee. I conclude with, again, a genuine tribute to Professor Carter and his Committee. In my view the Government can best show their appreciation of the very valuable work of this Committee by deciding to split the Post Office rightaway. They must not leave the Post Office staff in a state of uncertainty.
4.28 p.m.
Lord O'NEILL of the MAINE: My Lords, like every other speaker today I should like to start by thanking my noble friend Lord Orr-Ewing for making this debate possible. We owe him a deep debt of gratitude. Indeed, my Lords, I think this is the kind of debate in which your Lordships' House performs so well. When the noble Baroness, Lady Burton, was speaking just now I could not help thinking what a terrible thing it would be if some people in this country had their way and your Lordships' House was abolished. Who would represent the consumer at Westminster? So, like all the other speakers, I am most grateful to my noble friend Lord Orr-Ewing for making this debate possible. Also like every other speaker I should like to congratulate Mr. Carter and his Committee. How refreshing to read a sentence like this on page 120:
"We propose the division of the existing Post Office into two new Authorities "—
succinct, direct, determined and, in my view, correct. I hope that this will eventually happen because it is unsatisfactory, I think, to consider the possibility that, if the telephone service is making a profit, that profit or some of it may be used to keep down an excessive rise in the cost of the letter post. Far better that it should be on its own and standing on its own feet. Like many other people, I do not feel that big is beautiful. Indeed, I sometimes wonder whether in today's atmosphere British Leyland would ever have been created. You lose individual loyalties, and I believe it will be easier for

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there to be a loyalty to a telephone service and a loyalty to a postal service rather than loyalty to the whole organisation conglomerated together.
As one who has had the good fortune to go to North America on frequent occasions, I have had ample opportunity to compare the Bell Telephone Company with the telephone service which we have in this country. I was delighted to see the tribute paid to the Bell Telephone Company on page 105 in the Carter Report. The courtesy that one receives from the operators in North America—and I am saying "North America" purposely because Canadian telephones are also Bell telephones—on the telephone is quite unbelievable. I have had experience of this on frequent occasions. The service received is wonderful. If you ring Directory Inquiries, instead of waiting for a long time and finally being told of the difficulties which the operator is having in connecting you or in giving you the number—whether it is done by computer or not I have no idea—they are able to discover the number you are looking for almost immediately and then straight away to ask you whether you would like to be connected to that number. It is undoubtedly a wonderful service. Finally—and perhaps this is the important thing—the reception is wonderful.
As recently as today I had a distinguished Canadian visitor and I rang the refreshment department of your Lordships' House to ask if I might book a table for him. The line was so bad from the City of London to Westminster that I could hardly hear what the lady in the refreshment room was saying. This does not happen in North America. I am not an expert but I take it that this is due to the fact that not enough money is spent on keeping the junctions in good repair. But that is a most important matter and I see no reason why we in Britain should not have as good reception as those in North America have on the telephones.
I shall be very brief because I am not an expert in these affairs, but I am a consumer, and I should like to say a little about the postal service. In the South of Hampshire, where I live, we have a second delivery. I honestly believe that there is no point in having a second delivery at four o'clock in the afternoon. It would be
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just as good to have that post delivered the following morning. You cannot do anything with it at four o'clock in the afternoon, anyway. What would be far better would be to have a week-end collection. A friend of mine in the Post Office who shall he nameless said to me—and this would perhaps help the noble Earl, Lord Kimberley, when next he posts a letter; he told us what happened to one of his letters—"If you want to have a good delivery, post in the middle of the week—Tuesday, Wednesday or Thursday. You will then get a good delivery the other end."
Is it not unsatisfactory that a big industrialised nation like Britain has to post on a Tuesday, Wednesday or Thursday in order to be sure of getting a good delivery at the other end? That is surely something that should be looked at. I believe that many people would like the week-end system restored. I do not know what happens in London, but I should have thought that in the country areas, if this would help the Post Office, a second delivery could be dispensed with so long as we could have some kind of week-end collection—because one cannot now post at the week-end; it is a waste of time to do so because you know perfectly well that the process of dealing with week-end mail will not start until Monday morning.
I think I have said enough upon a subject about which I do not know nearly as many details as other speakers do, but I am a consumer. I have these strong feelings and, having had the good fortune to go to North America so frequently in the past, I hope that if and when the Government of the day decide to split the Post Office into two authorities we shall have a better telephone service—if not quite as good as that in Canada and America, at least something approaching the service they have which unfortunately here at home we do not have at the present time.
4.35 p.m.
Lord AIREDALE: My Lords, one of my friends told me the other day: "I usually find the later speeches in the debate the most interesting, because the later speakers tend to have only one axe to grind, whereas the earlier speakers think they have to grind all the axes

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and this is not humanly possible." I am sorry to have to say that I have four axes to grind, but I will grind them as quickly as I can.
First, answerability to Parliament. I think that most people are of the opinion that the Post Office was more efficient in the good old days, when Ministers were agreeable to answering Questions at the Dispatch Box about the day-to-day working of the Post Office, than obtains nowadays. I do not think that it is part of the law of England that Ministers need no longer answer detailed questions about the Post Office. I believe that if the Government accepted that the Post Office might become more efficient again if day-to-day questions were answerable in Parliament, this excellent practice could be resumed tomorrow. I should have thought that a proud corporation would quite accept the chance to defend itself against unwarranted attack through a Minister at the Dispatch Box and would not be too proud to admit that from time to time, of course, mistakes are made in the running of that vast organisation.
I should like to quote just a few words from the Carter Report which appear to support this suggestion that I am putting forward. The last sentence of paragraph 8.2 reads:
"The Post Office is given a defined purpose and a somewhat ambiguous financial target, with the idea that together these should enable the management to get on with running the business efficiently, at arm's length from Government".
It goes on in the next paragraph:
"It may be all very well for Government to be at arm's length from a nationalised industry which has no monopoly and which is subject to the discipline of market forces (e.g. British Airways)".
Then I leave out one sentence. It continues.
"Where market discipline is absent, the will of the people for the maintenance of proper services and reasonable efficiency has to be interpreted and conveyed by Government …".
My Lords, so much for that topic. Secondly, "Statutory exclusion from liability", which the Committee discuss in paragraph 6.29, where they question the advisability of continuing to have in force the two sections of the Post Office Act 1969 which, in the words of the Committee:
"give the Post Office what is virtually statutory immunity from liability for its wrongful acts".
We are still in the shadow of the passing
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of the Unfair Contract Terms Bill on the last day of the last Session; and I would support what the Carter Committee have to say about this exclusion from liability.
Thirdly, the recorded delivery service. This was discussed at Question Time in the last Session more than once by the noble Lord, Lord Monson, who is sorry he is unable to take part in this debate today. I should like to quote one paragraph of a letter from the noble Lord to the managing director at postal headquarters. It sets out this problem so well. The noble Lord, Lord Monson, wrote:
"I am only sorry that my … question … about why the maximum compensation payable in the event of the loss of a recorded delivery letter has remained absolutely static in the face of inflation, unlike the fee which has risen more than threefold in 10 years—has met so far with a less favourable response. It surely cannot be the intention to hold the maximum compensation at £2 indefinitely, because if inflation continues at the current rate of 17 per cent. per annum for the rest of this century, £2 will be worth no more than 8½p in present-day terms by the year 2000, or less than the value of a first-class stamp. Perhaps some further thought could be given to this."
One realises that the recorded delivery service is not intended for the transmission of very valuable things for which the registered post service is available. But presumably when the compensation figure of £2 was fixed in 1961 for the recorded delivery service this was regarded as the average cost of retyping the legal document, or whatever it was, that had become lost. If it cost £2 to type out a lease, or whatever it was, in 1961 it cannot possibly cost that small sum in 1977. There is something almost disreputable in a great monopoly being so quick to recognise inflation when it is setting its charges, and conveniently forgetting it when it comes to paying out compensation.
The final topic to which I should like to refer is the postcode. It seems to me that the Carter Committee were luke warm about the postcode and I thought that the noble Baroness, Lady Burton of Coventry, was rather luke warm about it this afternoon. I went to the post office and asked a straightforward question the day before yesterday. I said: "How do you find out somebody's postcode if you have not already a letter from them upon which they have remembered to put it?" I was told that one goes to the post office and, unless one is very lucky,

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stands in a queue. Upon reaching the counter, to the chagrin of the person behind who is hoping to buy a 7p stamp, one says to the clerk: "Can you tell me the postcode for 19 Tregunter Road, Blackburn, Lancashire?" The Post Office has separate booklets, one for each town, arranged with the streets in alphabetical order and undoubtedly the information can be obtained. But it is not surprising that the Carter Committee recommend the speedy introduction of postcodes into telephone directories.
This is not a straightforward matter. My Lords, if you look at any page in a telephone directory a great many lines are already full. The addition of postcodes is undoubtedly going to make telephone directories bulkier. I wonder whether even the Carter Committee have considered that if their recommendation that we have separate authorities for posts and telecommunications is accepted, the postal authority will apply to the telecommunications authority to increase the size of the telephone directories in order to serve the postal authority's business. There is the further point that very few people have comprehensive selections of telephone directories, and if this is going to become the customary way of finding out postcodes there will be the most enormous extra demand for complete sets of telephone directories. Somebody is going to have to pay for this.
My Lords, my final comment on this topic is that postcodes may save time in the Post Office; but what about the time that is going to be spent in post rooms looking up people's postcodes to enter on the correspondence? The overall saving of manpower is not going to amount to very much in the end. The Carter Committee said that a good deal of thought needed to be given to the postcode system, and I think that they were right.
4.44 p.m.
Lord ALPORT: My Lords, I am very glad to have this opportunity of supporting my noble friend Lord Orr-Ewing in the case he so admirably made out for early action to be taken by the Government to implement the main recommendations of the Carter Report: that
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is, to divide the present Post Office into its component parts with the postal services on one side and the telecommunication utility on the other side. Having listened to the criticisms of the noble Baroness, Lady Burton of Coventry, about the lack of responsiveness of the Post Office authorities to the views of the general public, I believe that this is probably due to the existing organisation, and I shall have one or two remarks to make about that later.
If I have a criticism to make of the Carter Report, it is that it does not seem fully to grasp the fact that, while the telephone system can be regarded as an industry or, as the noble Lord, Lord Wall, called it, a utility, the postal services form an integral part of the administrative apparatus of the country. In my view, they are as much a part of the Government as any Department of State, and the postal workers are as much civil servants as the Inland Revenue or the Customs. Let us be frank, my Lords: it would not be possible to administer this country without a postal system.
Let me remind the House that the Post Office started before any department or Government service except the Exchequer and the Judiciary. It is totally misguided to look upon the postal services as just another nationalised industry. In spite of what the noble Lord, Lord Wall, said, I do not think that it is possible to apply to the Post Office the managerial and financial criteria which can be applied to, say, the coal industry, which has no monopoly in the fuel industry, or the railways, which do not have a monopoly of transportation. If the railways disappeared tomorrow, we should travel by air or road or bicycle if necessary. The Government of the country could be carried on without any great interruption. But take away the postal services and consider how the financial administration of this country would be carried on.
Historically, what has happened is that the civilian population has been allowed, gradually, and at a price, to enjoy a service which was originally started to make the administration of this country more efficient and perhaps more centralised. In the process, the general public has helped to keep the costs of official communications lower than would have otherwise been the case. I think I am right in

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saying—and it should be remembered by your Lordships—that, in money terms, in value of currency, the price of a letter today is rather lower than the comparative price of sending a letter when Rowland Hill started the penny post 140 years ago.
But all this does not alter the fact that the Post Office is a Government service and, if tomorrow the civilian users were to stop using it—and that is possible because, if such a situation arose, other means would be found, by various forms of private communication, to carry letters or communications in the commercial world or even among private correspondents—the Government would have to pay to keep a Post Office in being out of public funds. That is brought out in the passage quoted by the noble Lord, Lord Airedale, in paragraph 3, chapter 8, although he did not quote the particular sentence which I now give your Lordships:
"the managers and employees of the Post Office know that, even if their performance is bad and public demand for services declines, the organisation can never be allowed to fail".
That is the fact of the matter. The conclusion which the Carter Committee did not draw is that the Post Office—and here I put my own point of view which I put to your Lordships on a previous occasion—must be administered as an integral part of the Government apparatus under a Minister responsible to Parliament just as is the case with, say, national insurance. Post Office employees should be civil servants, just as are the employees of other Government Departments. I think that that is the point which the noble Lord, Lord Airedale, introduced into his speech. By all means let us have Post Office consumer councils but not, as the report suggests, to stand between the Secretary of State and the public. Let those councils be primarily advisory bodies so that the Minister in charge of the Post Office can have the benefit of their advice and experience. When I say "the Minister in charge of the Post Office", I mean that I should like to see the reincarnation of the Postmaster-General of earlier days.
If the statement in the report which the noble Lord, Lord Airedale, quoted is correct, there are two means whereby postal services can give the essential efficiency which market forces do not provide. Here, as I said, I do not agree
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with the noble Lord, Lord Wall, that it is possible to apply what I think he referred to as "the principles of commercial efficiency" to the Post Office in the ordinary way. One method is that of Ministerial and Parliamentary accountability. I do not think it right constantly to take away from Parliament the responsibilities it has for acting, in the interests of consumers and the general public, as watchdog, over various developments that take place in the general administration of this country.
I think that, in the case of the Post Office, there are very strong arguments why Parliament should have a direct responsibility, not only through Ministers but also through a Select Committee of both Houses which would act as a watch-dog over the postal services. I know that the noble Lord, Lord Wall, who has had this experience, is opposed to political interference in the Post Office; but the fact is that there was so-called political interference for 100, 200 or 300 years before the present system of a postal corporation came into being. I do not think it did the Post Office any great harm and, as other speakers said earlier in this debate, the standard of efficiency of the Post Office in those days was a great deal higher than it is at the present moment. I believe that accountability is of great importance. I think that responsiveness to public opinion is of great importance and I do not believe that it can be applied to the Post Office unless there is accountability through Parliament.
There is one other way which I think is extremely important. I say today that I am a great admirer of the Post Office, of the postal service and of the whole corps of postmen who have served this country over so long a period. I believe that the morale of the postmen and postal employees is lower now than it has ever been. I read a column recently by Miss Veronica Papworth—and incidentally, it always surprised me, although I am surrounded by noble Baronesses, that I often find women columnists much better than men—in which she said she had found that one of her postal friends was careful not to disclose his form of employment in the local pub because he always found that to do so brought down on his head a shower of abuse. I am quite certain that that was not the case in earlier days. I am quite certain, also, that no

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service can be effective if its employees feel themselves to be under the impact of that sort of public pressure. I am absolutely certain that in order to get the type of service we require from the Post Office, something must be done to restore the esprit de corps and the morale of postal workers of all sorts. I am certain too that leadership and the feeling that their service was once again part of the Government Service, as I believe it should be, would do a great deal to restore that morale.
So, my Lords, I make the plea that I have made on a previous occasion that we should follow the Carter Report and divide the two parts of the present postal system into telecommunications and the Post Office. Secondly, I would strongly urge on your Lordships and the Government that they should consider re-establishing the General Post Office in its old form, under a Minister responsible for Parliament and supervised and invigilated, if you like, by a Select Committee of both Houses. In that way, I am sure that we should be able to get a much higher standard of service from the Post Office, and something to nearer that at which all your Lordships are aiming.
4.56 p.m.
Lord FERRIER: My Lords, I join with others in welcoming this debate and in thanking my noble friend Lord Orr-Ewing for introducing it. I should also like to add my congratulations to those of other speakers to the noble Lord, Lord Torphichen, on his maiden speech, which disclosed a keen knowledge and interest in the subject. We hope we shall hear from him again.
I do not know what your Lordships do, but, personally, when I read a report such as this, I always turn first to the recommendations. The first recommendation shook me to the core: that was the recommendation that the Post Office should be separated from the telecommunications side. My first reaction was: "Good heavens!—more boards, more bodies, more boffins, more bumf, more people writing to each other, and so on. "But when I read the report further and after discussing it with people who knew the details—people such as the noble Lord, Lord Wall—there seemed to be no question,
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despite the objections by the unions and the like, that such a division was the right thing. My mind goes at once to what the noble Lord, Lord Alport, has just said. He said, in effect, "Let us have a Post Office and let us have a Telecommunications Department responsible to the Postmaster-General, or certainly to some individual." My noble friend Lady Faithfull said to me, in connection with another matter the other day:
"Why is there no Minister on the Bench opposite whom we can quiz and with whom we can raise specific questions on a subject for which he is responsible?"
My heart goes out to the noble Lord, Lord Wells-Pestell, who seems to have to answer for everybody. But, as the noble Lord, Lord Alport, said, it is important that in Parliament there should be an individual responsible for answering questions in debates like this.
We have not really had very much time to chew over this report, but I think we can congratulate ourselves on the fact that it has been speedily prepared, speedily printed and issued; and here we are debating it. There is, of course, more thinking to be done about it and I have no doubt that the noble Lord, Lord Peddie, has a good deal to look forward to in studying it. In that connection I should like to support other noble Lords who have paid compliments to the noble Lord, Lord Peddie, and POUNC for the way they have tackled their responsibilities. I shall return to that subject again. My mind goes back to a debate on an Unstarred Question of mine on 16th March, to which I shall refer again. I have a bee in my bonnet about the cost of the installation and rental of telephone instruments in ordinary rural and highly crowded urban areas. I refer to the date, because that debate was too early for the POUNC to consider, as the report which we have in our hands is for the year ending 31st March 1977.
It is worth stressing, as was done by the noble Baroness, Lady Burton of Coventry, that whereas these technicalities, electronics and all the rest, to which the noble Lord, Lord Wall, and others referred, and whose advance they encouraged, will inevitably affect the service to the community in the years to come, I do not feel that we should allow our hopes in that direction to take our eye off the problem of what is needed by the

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people today. Stored programme control may be one thing, but the availability of a simple telephone ready to the hand is of great immediate importance. I should like to renew the suggestion that I made earlier, that now that the Carter Report is out and the new brooms will be approaching the business of directing the Post Office, the four points which were so ably made by the noble Baroness, Lady Burton, should be tackled at once.
One of these is the problem of making telephone installations available to needy people, who are both poor and not so poor. We can claim that the telephone is a lifeline of communication for many people. Old or handicapped folk, isolated in high-rise flats with lifts out of order, are just as remote from help, from contacts, from shopping and from all the necessities of modern life as people living in remote rural areas, miles from the nearest shop. We are living in an age of vandalised telephone kiosks. In large areas of the country, it is not possible to rely on being able to make a call from a telephone box, for you may find that it has been broken up. With the high cost of petrol, the absence of rural bus services and the like, the isolation of large numbers of people in the country is very marked.
Talking of the rural areas, the high cost of petrol has created another problem; that is, it has taken the mobile shop and the tradesman's van off the road. No longer can one say that the baker comes on Tuesdays and Fridays, and the butcher comes on Wednesdays and Saturdays because they do not. Gone are those days, and what I seek is a closer relationship between the State and simple people's simple needs. That is putting in different words what the Carter Committee's report states in several places. It is all very well suggesting that there should be lower charges for installations of telephones, or reduced rentals for telephones for certain individuals. When this subject was discussed in March, the noble Lord, Lord Winterbottom, made it perfectly clear in reply that, although that is all very well, the Post Office are not concerned with differentiating between ordinary customers, and it is the local authorities who administer the social services who have the power to do that.
What I have it in mind to suggest is that there could be a contact between the
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two sides. I would compare this with the senior citizens' railway ticket, which is a link between the people and British Rail; the disability disc, which is a contact between the handicapped, the Department of Health and the police, and the old age pensioners' concessionary fares on local transport, which is a link between social needs and public transport. Could not something of that nature be done, to make it possible to improve the lot of people who want to apply for telephones, but who cannot face, first, the high installation charge and, secondly, the high incidence of the rental or standing charge as it applies to units which are only lightly used.
If somebody decides to give grand-mamma a telephone and grandmamma, who hates the telephone anyway, makes only two outward calls a week, those calls rate at 35p per unit, because the tranche of £8 or £9 a quarter rental amounts to 32½p. I compare that with a telephone like my own, which has 600 calls in a quarter. Although the rental is substantial, it is nothing like so important as for a slightly used telephone of the nature I have described. Many old people's telephones are used much more for inward calls from grandchildren and so on, and from shops which ring them up and ask, "Do you want anything this week?"
To return to the question of installation costs, I should like to turn to recommendation 63 on page 130 in which, if I remember rightly, the Carter Report compares the position in this country with that in other countries. It states at the top of page 130:
"In some other countries, notably the United States of America, the supply of subscribers' terminal equipment has already been liberalised to a very much greater extent than in the United Kingdom".
As the noble Baroness, Lady Burton, said, if we hope to sell the service and fill up the automatic exchanges, many of which are not now fully loaded, we should realise the advantage to be gained by offering some kind of support to elderly and handicapped people. I pause, because I remember well that, when the noble Lord replied to me in March, he pointed out that the cost of reducing these expenses cuts both ways.
A tradesman who has taken a cottage in our neighbourhood has had a telephone installed. He was asked for a deposit

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of £80. I asked him what he felt about this deposit, in preparation for the debate today. He told me that he got it back after 15 months, having paid a series of quarterly bills amounting each to £15 or £16. However, he received no interest on his deposit.
As the noble Lord, Lord Winterbottom, said, discretion has been given to certain district postmasters to grant concessions for new instruments when they are dealing with exchanges which are not being fully used—that is, automatic exchanges which have taken the place of manual ones. I wonder whether there is sufficient local Post Office advertisement of the underuse of these automatic exchanges. They must be local Post Office advertisements, not advertisements in a national newspaper. As I have already said, there is a lack of a sales drive, but after the discussions which have taken place in both this House and another place about the Carter Report we may see a change in the general approach of the Post Office towards sales.
This brings me to the question of the £7 handout. I feel that this handout would have been far better employed in subsidising improved lower cost installations for certain subscribers. I should like to add to what the noble Earl, Lord Kimberley, said about the need for a lower charge for posting books. I do not send a book through the post nowadays; I wait until I see the person concerned and then hand over the book. The other point I should like to mention was raised by the noble Baroness, Lady Burton of Coventry. The Christmas card question should have been gone into in time for Christmas this year, but perhaps next year we shall be able to get an improved postal charge at Christmas that will help to revive an important industry which has been placed in such difficulties by the cost of posting today.
In conclusion, I have a miscellany of suggestions and grumbles—which is what this debate is for. I find that the new form of telephone bill—so much for so many units—makes it impossible to keep an eye on the cost of trunk calls, which in my own case, living as I do in a fairly remote area of the country, constitute the great bulk of my telephone bill, in particular when I am dealing with business connected with your Lordships' House.
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I wonder whether or not the figures on page 27 of the POUNC report arise directly out of the complaints received by POUNC regarding telecommunications. Disputed accounts have gone up by nearly 100 per cent. in one year. I imagine that these complaints arise from the point I have made, although I do not know whether anything can be done about it; I suppose that POUNC will have to face these complaints.
May I ask the noble Lord whether he is satisfied that the Post Office is adequately recompensed for the work that it does in connection with Giro affairs, the payment of old age pensions, social security and the like? It seems to me that in some of the larger post offices more than half of the people in the queues are waiting not for stamps or other postal business to be transacted but for their pensions, social security payments, licences or Giro transactions.
I hope that the Government will accept the POUNC recommendation that we should return to Sunday collections. This point has been mentioned before and I shall not return to it. However, it is a big sacrifice that people have to make if they cannot post letters for collection on Sunday. If you work in London for most of the week and you then go home to write letters, it is very frustrating if you cannot get them away until Monday unless you are in time for the last post on Saturday, at noon.
Next may I ask the noble Lord whether anything is being done to publicise the night letter telegram service. I had occasion to send an overnight letter telegram to West Africa the other day and I was shaken to find that the cost was 70p, plus so much per word, plus 45p for sending it on Sunday. I wonder whether that is a good plan if one wants to attract overseas business.
I see in my notes that I refer also to paragraph 94 of POUNC regarding the National Consumer Council's report, and in conclusion I should like to point out that their remarks are very much in line with what so many of your Lordships have been saying.
"The council were rather surprised that so little was said [in the National Consumer Council's report] about what the industries themselves should do to be more sensitive to customers' needs and to handle customers' complaints in a more sympathetic manner".

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The noble Lord, Lord Alport, mentioned the reluctance of staff in the Post Office to serve well. My experience of country post offices is that sometimes they are very much alive to the needs of those who live in the country.
On the subject of industrial relations, the noble Lord, Lord Alport, put his finger upon certain possibilities—the matter was raised in no uncertain terms by my noble friend Lord Orr-Ewing. What happened in this House when Her Majesty came to open Parliament may happen again; that is, the application over the whole country of industrial action which is aimed at our way of life. This problem tempts me to conclude my speech, as I did another one the other day, by saying that we must beware, because the vandals are at the portcullis.
5.18 p.m.
Lord CAMOYS: My Lords, like many who have spoken before me, may I thank the noble Lord, Lord Orr-Ewing, for this opportunity to discuss the Carter Report on that fascinating and vital business, the Post Office. Before explaining my views on the report, I must declare my interests first as president of the Mail Users' Association, which association gave evidence to the Carter Committee, and secondly as a member of a large financial services company which makes extensive use of Post Office services. I shall limit most of what I have to say to the postal business, since it is in that area that I hope that I have developed some knowledge. Noble Lords will see in what I have to say that I am very sympathetic to most of the contents of the speech made by the noble Baroness, Lady Burton of Coventry. On the other hand, I am afraid that I am in fairly strong disagreement with the suggestion made by the noble Lord, Lord Alport, that the postal business should be taken back into the Civil Service. I do not want to go into too much detail on that point at this stage, since I hope that it will never happen.
Few will deny either that the Post Office is one of the better businesses of its kind in the world or that it continues to face serious problems. The Carter Report emphasises both of these points and I, for one, am convinced that we should be truly grateful for the Herculean contributions made to the Post Office by Sir William
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Ryland and his many colleagues, such as Sir Edward Fennessy, in bringing the business through a very difficult period. Sir William's mastery of postal business and his acknowledgment of some of the problems and shortfalls which have been demonstrated, both in his annual reports and elsewhere, are indeed impressive.
Further, I think it is a tribute to all in the postal business that such a distinguished industrialist and manager as Sir William Barlow is prepared to take on the chairmanship of the Post Office. I am sure that we all wish him well in that post hut, like the noble Lord, Lord Orr-Ewing. I am deeply concerned that his task will be made unnecessarily difficult if the business continues to be handicapped with an upper salary structure at the very senior levels that is significantly less favourable than the private sector firms; and, also like the noble Lord, Lord Orr-Ewing, I wonder what the Government intend to do about it.
From what one has read and heard, it is obvious that there is a large degree of consensus among Post Office management, the union leaders and the users about the problems of the Post Office, and I welcome the Carter Report, not only because it is such a positive and constructive document, but because it contains an admirably lucid analysis of those problems. In my humble opinion the main areas for urgent action and attention are productivity, customer relations, accountability and the pension fund, and I will discuss each in turn. In doing so, I will try to demonstrate that the Government should act on the Carter Report proposals without delay.
Productivity is obviously a key area so far as costs are concerned. Productivity lag in the postal business now costs over 1p a letter. The evidence of the Post Office itself puts the cost of low productivity at £41·7 million at 1965–66 prices or in current terms at approximately £120 million. Over the past 10 years throughput per man has fallen by 14 per cent. These figures are bad enough, but they have coincided with a massive investment programme of £600 million in the same period. I hope that the noble Lord, Lord Winterbottom, in his reply will explain what has happened and why this investment has not produced an improvement in productivity.

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Another aspect of the productivity issue is of course the decline of service. Before two-tier was introduced in 1969 approximately two-thirds of mail received first class treatment; now only about one-third is first class. Additionally, as we all know, there has been a whole range of service cuts. Can the noble Lord, Lord Winterbottom, enlighten us by providing figures for the percentage of mail delivered the day after posting, on a six day working week basis since 1969? Further, it would be helpful—and here I think I would go a little further than the noble Earl, Lord Kimberley—if the noble Lord, Lord Winterbottom, could tell us what the productivity lag would be if service cuts were taken into account as well.
It is clear that the leaders of the two main Post Office unions are in principle in favour of arrangements to improve productivity. However, I suggest that it is vital that any productivity deals are subject to monitoring to ensure that improvements actually happen. It is depressing indeed that the sponsoring Ministry has allowed productivity to decline so much. Has the Ministry been fully informed of what has been happening? What productivity improvement targets is the Ministry now setting?
As other speakers have said before me, the biggest single contribution to improved productivity can come from increased volume, since between two-thirds and three-quarters of postal costs are fixed. The recommendations in the Carter Report on marginal costing, research and promotion are of special importance and it is encouraging to know—and here perhaps I am a little more optimistic than the noble Baroness, Lady Burton of Coventry—that the current postal management team has already taken note of many of the Carter recommendations in these areas. Indeed, there is a great deal of common ground among all concerned with the Post Office, but I submit that the union representatives on the new board will have a key role to play in convincing some of their rank and file on the need for increased productivity. I believe that the Post Office deserves support and encouragement in its marketing efforts and, I suggest, rather less criticism from some on its advertisements, which are after all an essential part of a cost-effective programme.
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As with any business, good customer relations are essential. Perhaps here the most important factor is accountability, as has been mentioned before. The analysis of this in the Carter Report on the need for improved accountability should be acceptable to all. In the past and, I suggest, at present, there has been, and is, insufficient information about how well or how badly the Post Office perform. The Post Office, on its own, has not been very forthcoming. The Post Office Act directs that the annual report should "conform to the best commercial standards". True, figures for return on revenue are given, and of course we have the profit figures; but, as the Carter Report points out, profitability alone is not an adequate test for a monopoly business. What is needed is a series of performance indicators, and I suggest the following: First, as a measure of productivity, adjusted throughput per standard staff hour and throughput per unit of standard income; second, the return on revenue; third, the return on assets and, fourth, service performance comparable one year with another.
I believe that all the information is readily available and that much of it is already given to the sponsoring Ministry at monthly or quarterly intervals. I should be grateful if the Minister could say when this information will be published. This problem of accountability needs to be solved as much for the sake of management and employees as for the sake of users. In my opinion a satisfactory system of accountability would help to ensure that the Post Office operates "with regard to efficiency and economy", as laid down in the Act. It would, hopefully, also protect management from excessive external interference. I might add that I think it would be helpful if, in future, we could have interim reports, which nowadays are produced by so many companies.
Looking ahead, much will depend on how the statutory monitoring body is organised; and it is here that I disagree with the Carter thesis. The proposal for a Secretary of State's council with a coordinating function is, I fear, too cumbersome and such a council might tend to abrogate executive power to itself. If the businesses are split it should be a management function to co-ordinate on matters of common interest. Further, the Carter

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proposal would involve too many people. Management would have to spend too much time explaining and too little time managing. There is little point in having such a council in addition to POUNC, which, as we know, has probably been the most successful of the users' councils. Rather, I should like to see a rationalised POUNC with enhanced powers—a small and highly professional body fulfilling the role of the statutory user body. It should be a halfway house between POUNC, as we now know it, and the proposed Secretary of State's council, but with both council members and staff selected on the basis of knowledge and ability. In particular, in my opinion the full-time staff should be largely made up of accountants, economists, lawyers and business graduates—people with a combination of commercial and professional experience rather than, as is the situation now, from the Civil Service.
The last area which I should like to mention is that of the pension fund. I am not an expert on pension funds so I shall probably disappoint the expectations of the noble Earl, Lord Kimberley. It seems very clear that the Government made a large mistake in 1969 in using 2½ per cent. Consols as the notional medium of investment. Further, I do not understand the Carter proposal that part of the deficiency should be offset by the benefit the Post Office obtained by inheriting book figures less than the value of assets by some £550 million. Those assets were, after all, necessary to the provision of services; they cannot be sold off. Last year the pension fund deficiency cost £70 million, or between two-thirds and three-quarters of a penny on every item carried, and a halfpenny of that is certainly attributable to Government. I understand that the problem is increasing and that next year a significantly higher sum may be required. This is an appalling burden for management and staff to carry and very demoralising, and therefore I urge the Government to take corrective action without delay.
The Carter Report sets out very well the problems and challenges facing the Post Office. The solutions to these are vital, if difficult. They are vital, I submit, if a significant proportion of the 170,000 jobs in the postal business are not to be threatened. I think the urgent need for
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action can be illustrated by the following. An increase in the letter rate of one penny yielded £108 million in 1969–70 and in 1976–77 only £88 million. The postal business's revenue base has indeed been sharply eroded since many large users have learned very well how to reorganise their communications and how to economise in the face of ever higher postal charges. In 1978 we may be facing another increase in the letter rate of at least a halfpenny, but perhaps even one penny. That, I think, is a very daunting problem.
I have emphasised the need for action on productivity, customer relations and accountability, and the pension fund. I submit that these are the primary issues that require action. Issues such as the split of the business, though important, are secondary. They are the means by which the principles already mentioned above can be obtained. I have tried to be constructive, and I am aware that the Post Office management and the union leaders are equally so. I submit, my Lords, as many have before me, that the Government have a duty to help them in their tasks by implementing much of the Carter Report without delay.
5.32 p.m.
Lord TREFGARNE: My Lords, it is not infrequently that we have debates on the Post Office in your Lordships' House. These are not always full day debates like today's; sometimes we have an Unstarred Question, but I believe that they are no less welcome for that. Today's debate is certainly no exception, and, as every noble Lord has said we are all grateful to my noble friend Lord Orr-Ewing for initiating this debate this afternoon. It also falls to me to congratulate my noble friend Lord Torphichen on his excellent maiden speech and on the very clear and crisp understanding he showed of the matters he told us about. I hope that we shall hear from him again and often.
The major proposal which Professor Carter has put before us is the one to split the corporation into two divisions, one of which will be a corporation in constitution, I imagine, very much like the Post Office is today. This is the telecommunications side, but I think that the professor envisages something rather different for the postal service. I think that my own inclination, speaking personally, runs along the

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lines suggested by my noble friend, Lord Alport, to the effect that the mail side of the business should be more closely regulated, or at least more closely answerable, than the telecommunications service. But Carter also proposes an overseeing advisory council to stand between Parliament and the Minister on the one hand and the new bodies on the other, and that is not an idea which I find particularly attractive, for the following reasons. First, I do not think that we can expect people to serve readily, and often at great sacrifice, on a body which is of a purely advisory nature. We all know that there has recently been difficulty in filling posts on public bodies, both for reasons of the task, and also, unhappily for reasons of salary, which we need not pursue now. I think that these problems would be increased if we were looking for people to serve on the sort of advisory body that the report envisages.
I believe that the report sees the new council as a sort of POUNC with teeth, and I am not sure that that would be particularly desirable. I heartily agree with everything that has been said this evening about the merits of POUNC, but I am not sure that those merits would be enhanced if POUNC had greater strength, greater power to issue directions or anything like that. Indeed, it is not proposed, as I understand it, that the new council should have powers; it is to be advisory. Power without responsibility has been somebody's prerogative throughout the ages, and I am not sure that we should wish to put the new council in that position. I should like to see the two corporations both directly responsible to the Minister, rather as the single corporation is responsible to the Minister today.
I want now to touch on the matter of industrial democracy. The noble Lord, Lord Winterbottom, will recall that at the end of the last Session of Parliament, he steered a short Bill through your Lordships' House to increase the number of members of the existing Post Office Corporation, As I recall, this provided for the appointment of certain additional members—in particular, representatives of the unions and also two consumer representatives. I criticised those proposals then and I reiterate that criticism now. I do not believe that the mere addition of union representatives to the
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Board of the Post Office Corporation is really going to help matters a very great deal. I believe that the interests of those union members and, indeed, the interests of the workers in the Post Office Corporation generally are not identical with the interests of the corporation itself or indeed with the consumers' interests.
I am persuaded that the consumer representatives on the corporation's Board are almost totally ineffective, not because of the people selected but because of the task which confronts them and the tools which they are given. I listened with interest to my noble friend Lord Orr-Ewing telling us about the eight-centimetre wodge of paper which arrives on the doormat of these unfortunates just 24 hours before Board meetings. I must confess that the description was relayed to me as a three-inch wodge of paper, but I remember that the noble Lord was recently Chairman of the Metrication Board.
Maybe I should enquire what progress has been made with the appointment of these new members to the Post Office Board. In particular, have the union members now been appointed and have sufficient appointments from the consumer body now been found possible? I recall that the noble Lord hastened the Bill through your Lordships' House and rigorously opposed the amendments that we suggested from this side, as well as the suggestion that the matter should be held in abeyance at least until this present report had been carefully considered. Apparently, that was inadvisable and not possible. So I feel sure that all the appointments will by now have been made.
In the gracious Speech, we were told that further legislation was coming forward shortly in connection with the right of workers in the Post Office to strike. I wonder whether the noble Lord can be a little more forthcoming than that and can give us some indication as to what rights exactly it is proposed to confer on these workers? For example, is it proposed, that they shall have some right selectively to decide, for any reason whatsoever, that certain postal users or telephone subscribers are to be denied a service? Alternatively, are they simply to be granted some general right to down tools if they feel so inclined? I fancy that the latter right already, exists because noble Lords will remember that in 1971 there was a

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total postal strike and there was never any question then of challenging the right of those workers to stop work.
My noble friend Lord Camoys and other noble Lords mentioned the plight—I can call it nothing else of the contract mail users. Those people believe that the Post Office has not really been adequately aggressive in its marketing policies or, to put it another way, the Post Office has not been sufficiently generous in its discounts to attract the necessary increase of business which the Post Office so desperately needs. I wonder whether the Post Office has really considered all the advantages that arise from the contract users of mail services. Noble Lords will remember that those people often post to some extent pre-sorted mail, at times convenient to the Post Office. Their mail is generally second class and thus little or no extra sorting labour is required because such sorting as remains to be done can be done at times convenient to the Post Office. The general volume of post is, of course, increased and, indeed, return mail is often generated for the Post Office by the outgoing items which are carried. That is surely generally good for Post Office business. I believe that the Post Office will be strongly advised to adopt a much more forward looking policy in this matter and thus increase the volume of mail which is presently passing through the system.
I wish to refer again to the matter of pricing policy which must, of course, be directly related to the costs incurred. It is without doubt greatly to be regretted that the productivity of the postal workers has, far from being maintained, declined over recent years, despite the introduction of mechanical sorting systems. I recall that, during the debate to which my noble friend Lord Ferrier referred on the 19th March 1975, which was initiated by the noble Lord, Lord Beaumont of Whitley, the noble Lord, Lord Strabolgi—who, happily, is in his place tonight—when replying for the Government, told me that there had been no delay in the introduction of mechanical sorting systems, certainly not arising from any reluctance on the part of the work-force. However, the fact of the matter was that at that time, in March 1975, agreement had not then been reached with the Post Office workers, and it was not until
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later in that year that they agreed in principle to accept the sorting machinery. Only now is it beginning to come into anything like widespread use.
As regards telecommunications, we have the shining example of the Hull Corporation system. Some of your Lordships will know that the Hull Corporation runs its own telephone service quite independent of the Post Office and is licensed to do so. That service, serving only the City of Hull and its immediate surroundings, made a profit of no less than £400,000 last year, which surely shows what can be done if one sets one's mind to it.
Another important matter, again associated with telecommunications, is how we are to meet the capital requirements, both now and in the future. It is true that for the most part the Post Office telecommunications capital requirements are met from internal revenue sources. However, despite the optimism of the Post Office in this matter, I do not believe that it will be able to do that indefinitely, because so many of the exchange systems are to be changed and the capital requirements therefore will be extremely great in the short and medium term.
I wonder whether the Post Office will consider more sympathetically some way of ameliorating this requirement, particularly by allowing subscribers to purchase and install their own equipment, and in some cases contracting-out the installation of equipment to commercial companies for hiring to third parties. The Post Office has consistently objected and complained that this is unnecessary and unsatisfactory. I think that its principal defence is that the equipment that third parties may connect to the telephone service may be inferior and damage the system. The American experience in this matter does not bear out that fear. I hope that the Post Office will take a more sympathetic view of the matter in the future, especially as it will, I believe, relieve it of some considerable capital requirements which may otherwise have to be met by borrowing.
I should like to mention the Sunday post. This is a thorny topic. I think that all noble Lords who have spoken tonight have sought to persuade the Post Office to review its decision in that matter,

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and I should like to do the same. The Post Office claims that it has saved £9 million per annum by eliminating Sunday collections. It goes on to say that on a Sunday it can expect to collect only one-sixth or one-fifth—a figure of that order—of the number of letters that it would normally collect on a busy weekday. I wonder whether the Post Office has paused to consider the relative importance of all those letters. I agree that that is difficult to measure, but I put it to the Post Office that there are some people who have to post their letters on a Sunday and those letters may be extremely important. If those people were to post their letters say, mid-afternoon on a Saturday, they would not be collected until Monday morning and not delivered, even if they are lucky, until Tuesday morning. If perchance their letters fall within what the Post Office claim to be the only 7 or 8 per cent. that are not delivered the following morning, they would not be delivered until Wednesday morning. That is a pretty poor service.
I suspect that the reasons the Post Office advances for not reintroducing the Sunday service are not the real reasons. It has been represented to me that the real difficulty is that the unions, having ceased to work on Sundays, would now be very reluctant to go back to work on Sundays, no matter how high the overtime payments. Whether that is the case I cannot say, but I do not believe that, if it was explained to the unions how important it was to maintain a proper service, they would really object. In our experience, and as other noble Lords have said, Mr. Jackson and his colleagues are anxious to be part of a flourishing and growing service. One of the ways in which they could achieve that would be by helping to restore the Sunday collections.
My noble friend Lord Camoys also discussed the pension fund deficit. I think that it is worth reiterating the figure. At present, according to the Carter Report, the pension fund deficit is, I think, £770 million. Thus, one can understand the Government's reluctance to underwrite that deficit without any sort of contribution from anywhere else. On the other hand, that deficit has arisen, in part at least, from errors of judgment—I can put them no higher than that—some at Government level and some
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perhaps in other quarters. I think that it would be right for the Government to underwrite part at least of that deficit. However, I fear that there will be no alternative to funding some other part of it by a contribution from the postal service and telephone service users.
One final point that I want to put to the noble Lord concerns the question of postbuses.
Lord WINTERBOTTOM: Postbuses?
Lord TREFGARNE: Postbuses. I will explain what they are to the noble Lord. They are mentioned in the Carter Report. In other countries of Europe, in particular in Scandinavia, there is a system whereby remote points are served by, say, a small minibus which carries people but which also delivers mail, milk and other minor deliveries which people require. I put it to the noble Lord and to the Post Office that some of the difficulties to which they often point, of having to deliver mail to very obscure and remote places, could well be overcome if they were to assist in setting up these postbus services which I believe would assist the obviously difficult economics of deliveries of that kind. This is a suggestion which would solve one of the problems about which the Post Office so often complains. As I have said, we are all greatly indebted to Professor Carter for his most excellent report. I hope that the Government's response will be forthright, crisp and prompt and that, in the very near future, we may hear their views and, if they have time before they leave Office, perhaps they can introduce some legislation on the subject.
5.52 p.m.
Lord WINTERBOTTOM: My Lords, I am certain that the whole House is most grateful to the noble Lord, Lord Orr-Ewing, for initiating this debate and in particular for the way in which he introduced it. His analysis of the situation was obviously based upon a very deep study of the material available to him and he completed his analysis by making concrete proposals, which in my view is how we must tackle the sort of change that we are discussing in the major service industry in this country.
At the same time, coupled with those congratulations, I should like to congratulate

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the noble Lord, Lord Torphichen, on his maiden speech. This House is filled with people who are prepared to defend the rights of the consumer, but in the noble Lord we have a technical expert whose eye I hope will play upon this particular subject over the years during which he will take part in similar debates. We look forward to hearing from him again.
The terms of the motion enjoin us to look at the performance of the Post Office as a public service, and this was a prime concern underlying both the Post Office Review Committee's report and the Annual Report of the Post Office Users' National Council. Throughout this and previous debates in your Lordships' House, discussion has focused on the kind and the quality of services which the Post Office offers. This is as it should be. The Post Office is a service industry—and, as I said earlier, it is the largest service industry in this country—and it is by the services that it offers that it must be judged. I am sure that I need not labour the point that service industries face particular difficulties: any of the noble Lords here present who has recently paid an hotel bill will be aware of that fact. What is important is that we recognise, as the Carter Report clearly does, that service industries face problems which are different in kind and degree.
None of us disputes that the Post Office, through the services it provides, plays an integral part in the conduct of both our business and private lives and, indeed, in our Governmental apparatus, as the noble Lord, Lord Alport, pointed out. The efficiency with which the Post Office organises itself and conducts its operations will go a long way towards determining the smooth running of our affairs.
There may well be those who feel that there is altogether too much debate on the subject of the Post Office. I am not one, although I suppose I am the chap who has to answer on the subject. The noble Lord, Lord Ferrier, seemed to be rather doubtful where he should look for information, but for the moment at least I am responsible for that.
Some would also argue that "survival of the fittest" services will result in the major changes which are required if the
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Post Office is to meet changing customer requirements. There is, of course, some force in this argument: as old services are used less and less, they become more expensive and less attractive: as new services are used more and more, per contra they become cheaper and more attractive. However, it is important that changes in service march closely in step with changes in customers needs and informed public debate can do much to ensure this.
Our debate today has inevitably tended to concentrate on those changes in services which are seen by some as changes for the worse. Today's is no exception. But it is only fair that those taking part should remind themselves of the perceptive comments in the Carter Report at paragraph 10.4 that:
"What most users of the posts say they want is a service which is both cheap and good: few will have much idea of the trade-offs between worsening of service and reductions of price".
The report was at that point considering the postal business, but it represents a general truth. I think that this is the point which we must bear in mind when we consider the question of the ending of Sunday services and various other changes in procedures which noble Lords in general seem to think are changes for the worse. For instance, I am sure that the Post Office could so arrange its services that some 95 per cent. of all mail posted, both first and second class, arrived on the day after collection. The cost involved in providing additional sorting machines and vast increases in manpower, however, would be prohibitive. I believe that that also applies to other points raised in today's discussions.
Of course, this House naturally serves as a place for constructive criticisms to be voiced rather than as a Post Office admiration society. Maybe the day will come when it becomes a Post Office admiration society, but that is not as yet. However, I feel that I should do something towards painting the other side of the picture by looking at some of the real improvements and innovations that the Post Office has introduced in recent years. That point was, of course, recognised most generously by the noble Lord, Lord Orr-Ewing.
There have been, and will continue to be, improvements in the mechanisms

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by which messages are sent. By now the usefulness of the long-faithful Strowger exchange and of the more recent Crossbar equipment is being overtaken by the benefits of the newer, more advanced systems. Noble Lords have mentioned the new systems that have come along to take their place. But by the early 1980s it is planned that the newest generation of exchange equipment—the fully electronic computer-controlled system X—will be introduced into the United Kingdom network. In two areas the Post Office is already in the space age: its use of telecommunications satellites is an obvious example. Noble Lords will have noted the introduction of optical fibre cable into the public telephone system in East Anglia; it is hoped that the manufacture of optical fibre will eventually be carried on in Skylab style conditions.
Of course, it is not only in improving its internal mechanisms that the Post Office is making valauble innovations. New services are being introduced. I am sure that many noble Lords will be aware of the introduction in 1978, on an experimental basis, of Viewdata, the system which will enable individual subscribers to dial access to a visual display of a variety of information on general and current-affairs matters. In the longer term we can anticipate the development of Viewphone and the Telemail system of home printing of electronically transmitted letters. I do not imagine that noble Lords would expect to see such dramatic changes in the postal business, which has, after all, several centuries of experience in mail-handling. Nevertheless, new services are being introduced and innovations are being made. I would mention in particular Datapost, which provides a rapid and secure delivery of confidential documents and computer tapes. May I also mention the experimental Expresspost, which offers two hour delivery within Central London and same day delivery between various major cities; Exchangepost, which provides a central exchange for mail between major firms in the city; the experimental delivery of newspapers in rural areas and the extension of the scope of the cheaper tariff for local parcels into the new County Parcels scheme.
These developments involve both the postal and telecommunications businesses
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and will afford customers a wide range of more efficient and more extensive communications services, in addition to what might be described as the "bread and butter" work of the Post Office. I would not wish to weary noble Lords with long lists of statistics—of course I am immediately going to do so—particularly as I expounded at some length upon the scale of the Post Office operation during our last debate. In 1976–77 the telecommunications businesses handled nearly 17,000 million telephone calls to or from its 20 million telephones with plant working satisfactorily for over 98 per cent. of these calls. Four out of every five telephone subscribers in this country can now dial direct to—and on this I must correct noble Lords because I think progress marches on-73 nations across the world, which I believe is a higher figure than that for any other country. The postal business handled over 10,000 million items of mail and delivered to 21 million addresses, with 93 per cent. of all first-class letters being delivered on the next working day after collection and 96 per cent. of second-class letters being delivered by the third working day after collection.
A number of noble Lords have raised the question of the comparability of the efficiency of the Post Office with other international systems, and also progress in efficiency within our own Post Office and telecommunications systems. Noble Lords who may have read a major article in today's Financial Times may get some feeling of the extraordinarily difficult thing it is to make such comparisons. A European organisation has been making comparisons between the Dutch, British and German systems of telecommunications and the results are quite fascinating. However, they cannot be compared, if you take England and Germany which are very similar systems, unless very substantial corrections are made in the way the statistics are put together. So it is very difficult at this moment to say if progress is being made, and where the British system stands. I have a large collection of statistics in my brief which I will send to those noble Lords who have expressed their interest in this question of comparability, and this will give them plenty of raw material for further questions. They are in fact extremely interesting.
Lord TREFGARNE: My Lords, would it not be better if the noble Lord could have those circulated in Hansard? The difficulty is that if he sends them privately to the noble Lords they do not get the same publicity as they would in Hansard.
Lord WINTERBOTTOM: My Lords, the figures are very extensive. I am not certain to what degree we can write this kind of thing into the record. What I can do is put them into the Library in addition to sending them to noble Lords, so that if anybody really wants to look at them, there they are, and that I will do.
Having talked about some of the innovations and improvements that we have seen in the Post Office, I should like to take up some of the points on which concern has been expressed in today's debate and in the wider debate that takes place on television across the country. I do not think I misrepresent either of these debates if I say that they show common concern at what is seen as the erosion of traditional standards of service. May I, in a rather untidy manner, answer a number of points raised during the debate. I think perhaps most important of all is the question of the right to strike, which in fact at least two speakers have laid down as the most important element of concern in the present situation.
I should like to read what are quotations from official sources which show the state of the thinking of the Government today. Your Lordships will remember that Mr. Gouriet, on behalf of the National Association of Freedom, sought earlier this year to prevent industrial action from being taken by the Post Office unions against South Africa as a protest against the treatment of black trade unionists in that country. The judgment of the court in that case indicated that certain provisions in the Post Office and Telegraph Acts can be interpreted as meaning that industrial action by Post Office workers is a criminal offence. The Government believe that it is wrong to deny this group of workers the basic right to withdraw their labour; a right which, before the Gouriet case, we all thought they already had. I think that the noble Lord, Lord Trefgarne, shared that view when he quoted an earlier general strike of Post Office employees.
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For this reason the Government propose to introduce legislation to amend the relevant Acts to ensure that Post Office workers will be able to take normal industrial action without fear of criminal prosecution. The exact form of this legislation has yet to be decided and will be the subject of consultation with the Liberal Party and the unions, the Post Office itself, and the Post Office Users' National Council. Sir William Barlow has recently commented that a right to strike would be acceptable to the Post Office provided that it did not extend to direct action against an external situation; that is, sympathetic action. That is the point of view of Sir William Barlow on this subject.
A spokesman for the Liberal Party said that the Liberals would not support a Bill giving Post Office workers the right to strike if its provisions were unable to distinguish between normal industrial action and action taken for political reasons. That is the present state of debate on that subject. Although it does not answer all noble Lords' points, I think it is a contribution.
Lord TREFGARNE: My Lords, I am sure that the noble Lord will not mind my intervening on this important point. I am happy to hear the views of the Liberal Party and Sir William Barlow. Will the noble Lord say what is the Government's definition of normal industrial action? Would that definition entitle members of the Post Office Workers' Union, or any other Post Office union, selectively to prevent the distribution and collection of mail in a certain area?
Lord WINTERBOTTOM: My Lords, of course, as I said, the exact form of legislation has yet to be decided. You see, legislation is required. The point of legislation, when legislation is laid before your Lordships, is that the full force of your Lordships' views can be brought to bear upon it. My own view is that we all understand what normal industrial action is and what abnormal industrial action is. I expect that the legislation, when it does appear before us, will in fact not be very different from how we would interpret the change in the situation of the Post Office unions. There will be no change of course until such time as legislation is introduced.
Lord TREFGARNE: My Lords, apologise for intervening once more. Is the noble Lord saying that legislation will definitely come this Session?
Lord WINTERBOTTOM: No, my Lords, I did not say that. I said that consultations were going on towards laying legislation. That fact appeared in the gracious Speech, and legislation will come in due course.
Lord ORR-EWING: My Lords, may I intervene briefly, as I raised this point? I am grateful to the noble Lord for all he is saying. Many of us in different parts of the House feel that selective—it may not be political—strike action against a country, or a body, or an area which the union object to is not normal industrial action. I hope that if the Government come forward with this legislation—we hope they will not—they will bear the point very carefully in mind that it should not be selective, and that it should not be up to them to choose against whom they aim the strike weapon. Perhaps the noble Lord could also think of a cooling-off period too, as happens in every other country. I think that in such a sensitive area no other country allows its unions to strike.
Lord WINTERBOTTOM: My Lords, I am certain that the points of view of the two noble Lords will be borne in mind as a strong expression of opinion from the Benches opposite.
I have mentioned productivity and now I come to the question of pensions, again a matter of concern to your Lordships. The Government's spokesman said in reply to the Select Committee on Nationalised Industries in October 1976 that they did not accept the recommendation that the responsibility for the fund deficiency should be transferred to Government. Carter made proposals which are a compromise entailing the idea of partial funding. These will be considered by the Government and a decision made in due course; presumably "in due course" means at the time when the White Paper on the Carter proposals as a whole is published. The nature of these proposals is such that its implications would extend far beyond the Post Office. I think that that is clearly true.
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Many points have been raised in this debate. I have touched on two of what I consider to be the most delicate and difficult ones and I shall, with permission, write to noble Lords, send them statistics, or table statistics in the Library, and shall try to give a reasoned reply to what has been a reasoned debate. However, before closing I wish to make a point which I believe is particularly valid. In spite of criticisms, there have been substantial improvements in performance in many areas of the Post Office. This improvement in performance would not have been possible without the tremendous efforts of the Post Office, in co-operation with the staff and unions, to make savings wherever possible. These savings amounted to £57 million last year and I pay tribute to all concerned. It is a very substantial help to the Government's policy of controlling Government expenditure.
Baroness WARD of NORTH TYNESIDE: My Lords, would the Minister be kind enough to say, if he intends to circulate his answers only to those who have taken part in the debate, what point there is in sitting, listening and being interested in all that has been said if those like me who have not taken part but have listened in that way are not to receive those answers?
Lord WINTERBOTTOM: My Lords, if the noble Baroness had asked me anything, I would of course have answered her, and I frequently do so.
Baroness WARD of NORTH TYNESIDE: I do not want to keep interrupting, my Lords. If I listen to a debate and hear many interesting points raised by noble Lords who are expert on these matters, I should then like to hear the Minister's answers. It is no good the noble Lord Just writing to those who have taken part. What is the good of my sitting here listening if, having done that, I am not to get proper answers direct so that I and others may read them in Hansard? Simply writing to noble Lords in the way the Minister suggested is ridiculous.
Lord WINTERBOTTOM: My Lords, I must point out to the noble Baroness that I do not think she has ever been in my position.
Baroness WARD of NORTH TYNESIDE: Thank goodness!
Lord WINTERBOTTOM: I am, my Lords, between an upper and a nether millstone; the upper millstone is represented by noble Lords who want answers to their questions and the nether one is represented by the apparatus and those on the Front Benches who want to keep debates within a certain limit. I recall one very early debate on defence when, having addressed the House for 50 minutes, I saw the faces and attitudes of noble Lords opposite which were such as to make me be very careful not to make the same mistake again. This has been an important debate. Frankly, it has been directed not so much towards the education of the noble Baroness as towards the education of the Government and ancillary organisations, and that is surely the reason for a debate. The views of the House are being expressed to the Governmental apparatus and one cannot do more than do one's best to answer the key points of the debate and then do one's best to try to inform individuals who have special knowledge or who wish for special information. I try to strike a balance between boring the House stiff and giving all the information noble Lords have asked for.
I was saying that there had been a saving of £57 million last year. Of course money is not everything. A responsive and intelligent management backed by its employees and discussion will also be necessary. I am not advocating either gloomy pessimism or facile optimism. Rather, I would join with the annual report of the Post Office Users' National Council and the report of the Post Office Review Committee in advocating meliorism, which the dictionary describes as
"… the doctrine that the world may be made better by human efforts".
Whether or not that is true of the world I am content to let philosophers decide. I am, however, convinced that it is true of the Post Office. I can think of no better way of ending these remarks than by citing one of the first statements of the new chairman on taking up his post. He said:
"With the advantages possessed by the Post Office, coupled with management enthusiasm, it should be possible to set an example by giving a better service to the public".
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I am sure that those words are welcome to us all.
6.16 p.m.
Lord ORR-EWING: My Lords, I thank all those who have taken part in this debate, which I believe has been a useful one. There is so much hangover from other important Select Committees and Royal Commissions that I hope the Government will note that we expect action. My noble friend who speaks on Post Office matters so often, the noble Earl, Lord Kimberley, suggested that we could perhaps have the White Paper by Easter. I thought that he was being far too kind; I should like to see the White Paper by Christmas because the Government will by then have had nearly five months—since July—to work out an answer to this useful report. I hope that they will at least ask their advisers to start putting drafts in front of them as soon as possible. Let us get on with it. Let us show that we are interested in what the Post Office is doing, that we back up people who give their time to committees and that we plan to take action as a result. In many cases legislation is not needed; we could proceed straight away.
I thank noble Lords who have taken a special interest in this debate and I thank the noble Lord, Lord Winterbottom, for his courteous reply. I assure him that we shall go on pressing him and that we shall in particular be looking most anxiously at this question of the right of Post Office workers to strike. This is a freedom which could affect people in all parts of the country and which would be very serious indeed for those in an emergency situation. It is perhaps the most sensitive of all the subjects and we shall take great care as we wait to see what the Government will put forward. With those words, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

ABERDEEN SHOEMAKERS INCORPORATION ORDER CONFIRMATION BILL
Brought from the Commons; read 1a; then (pursuant to the Private Legislation Procedure Act 1936) deemed to have been read 2a and reported from the Committee.
CITY OF GLASGOW DISTRICT COUNCIL ORDER CONFIRMATION BILL
Brought from the Commons; read 1a; then (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.