HL Deb 07 June 1988 vol 497 cc1259-71

4.29 p.m.

Lord Beaverbrook

My Lords, with the leave of the House, I should like to repeat a Statement made in another place about Girobank plc, a subsidiary of the Post Office Corporation. The Statement is as follows:

"Since 1968 the Girobank has grown into a successful banking arm of the Post Office, with a particular strength in money transmission and in handling deposits of corporate cash. It now has about 2½ million customers and in 1986–87 made a profit before tax of £23.1 million.

"Girobank now needs to expand vigorously and take on other activities in order to develop in the competitive world of modern banking. The Government believe that this expansion can best be achieved in the private sector. We therefore asked the Post Office to consider this and the Post Office Board has agreed that taking Girobank out of the public sector is indeed the best way to proceed. The Post Office and Government have therefore agreed that the Post Office should plan to offer Girobank for sale to a financial institution or other suitable company. Suitable bidders will now be given the opportunity to tender.

"The Post Office Board and its chairman, Sir Bryan Nicholson, have agreed on the main factors which will be taken into account in evaluating bids. Price will of course be a major consideration in order to ensure a fair deal for the taxpayer. We also agree that weight should be given to the prospect of selling to a purchaser who will widen choice for the general public in banking services. It will also be important to safeguard the close links between Girobank and Post Office Counters Ltd. A new rolling contract has been concluded between Girobank and Counters which will govern their relationship under new ownership. We will be looking for a purchaser capable of developing and expanding Girobank's business. Post Office Counters can expect to see increased business opportunities from that expansion as it is achieved.

"The management of Girobank is today explaining and discussing this decision with its employees and their unions. Prospective purchasers will be invited to propose arrangements to enable management and employees to share directly in the future success of the business. The successful purchaser will of course also have to satisfy the strict requirements of the Bank of England.

"This is a major opportunity to promote competition and to widen customer choice in the banking market through the trade sale of a nationalised bank. We believe that the Post Office, Girobank, Girobank's staff and its customers will all be well served by this new and important stage in the bank's development."

That, my Lords, concludes the Statement.

4.32 p.m.

Lord Williams of Elvel

My Lords, the House will be grateful to the noble Lord for repeating the Statement made by the Chancellor of the Duchy of Lancaster in another place. I should perhaps draw attention to what I believe, subject to correction from the noble Lord, to be certain differences between the Statement which the noble Lord has read out and the text of the Statement I was given which I think was made in another place. In particular, the first person singular has been omitted. The Statement made in another place read "I therefore asked"—that is the Chancellor of the Duchy of Lancaster. Then it went on to say that the Post Office Board and its chairman "have agreed with me". Finally it said "I believe"—that is again the Chancellor of the Duchy of Lancaster. In each case the noble Lord has used the first person plural: "we", "with us" and "we".

I am sorry that the Secretary of State who is responsible for this department is not making this Statement. I mean no disrespect to the noble Lord. I imagine he is indisposed and of course we all wish him a speedy recovery, but it is difficult to avoid the impression that in some senses there are two DTIs now. There is a DTI for which the Secretary of State is responsible and a DTI for which the Chancellor of the Duchy of Lancaster is responsible. Indeed this is quite in keeping with the enterprise culture which the noble Lord the Secretary of State has advocated, having two competing departments doing more or less the same thing.

Turning to the Statement itself, the main question that I have is, why? Why is Girobank being sold off not into the open market, not to benefit small shareholders and not to widen share ownership, which has been the justification for many measures of privatisation; but, as the Statement says, to, a financial institution or other suitable company"? The Girobank is, after all, a successful bank. It runs a successful money transmission service. It is efficient and cheap, and diversification could proceed in a perfectly normal manner if the Post Office were so disposed. Indeed it would be possible to finance that diversification through the market—through an issue of loan stock or other form of capital stock if necessary— because the Girobank, as I think the Statement points out, depends on its relationship with the counter services of the Post Office for its success. That is where the Girobank should build and, in our view, it should build within the ownership of the Post Office. So why change the ownership at the point at which the Girobank has grown into a successful banking operation?

Is the answer that the Post Office was directed to sell? We see in the Statement the expression, I therefore asked the Post Office"— or, in the noble Lord's version— We therefore asked the Post Office". Was that a direction from the Government? The Secretary of State is perfectly entitled to make a direction to the Post Office but we should like to know whether the Post Office sought to sell the Girobank in the first place or whether the Secretary of State directed the Post Office to do so.

Why is there to be no opportunity for flotation on the open market? There are to be no small shareholders, no wider share ownership and no diversity of ownership. Why not? There appears to be no restrictions on foreign ownership. What the Secretary of State said at Question Time was that he would be perfectly happy, so far as I could see, for foreign owners to own all British industry and all the financial institutions. There is no restriction here at all on the foreign ownership of the Girobank after this form of privatisation. Is that really what the Government intend?

The requirements of the Bank of England are mentioned in the Statement. Which requirements of the Bank of England is the noble Lord referring to? Are they the "fit and proper person" requirements of the Bank of England or are they the full requirements of the Bank of England under the Banking Act which we have passed in the last year or so? If the latter, does that not rule out building societies and insurance companies, which are the natural purchasers of the Girobank? Would the noble Lord give us some clarification on that?

The rolling contract between the Giro and the counter service is referred to. This is the basis of the Girobank's success. The rolling contract, if one can interpret this expression, means a contract that can be terminated at any date given suitable notice. Which side has the right to terminate the contract? Do both sides have the right to terminate? Does the Post Office only or does the acquiring institution have the right? If it is the latter, their intention will not be to build on the counter services, which is the meat and drink of the Girobank, but to turn it into something quite different and unrecognisable.

What guarantees will there be that the acquiring institution will expand the services of the Girobank? What assurances will the Post Office require from any acquirer on that point? Will the contract with the Post Office be on a commercial arm's length basis or will it be determined in some manner which we do not yet quite understand? In other words, will the Post Office, if the Girobank is sold and if the rolling contract is continued, get the full benefit of the counter services that the Post Office will be offering? By "full benefit" I mean full profit. Why not, other than dogma, keep this as a public institution? What is wrong with entrepreneurial public ownership? Until there is a satisfactory and logically coherent answer to that question, we are bound to oppose the proposal.

Lord Ezra

My Lords, I should like to put three questions to the noble Lord on this Statement which he has been kind enough to repeat to us, some of which tie in with the remarks just made by the noble Lord, Lord Williams. First, on the question of competition it seems to me implicit in the Government's proposal that this measure, this way of disposing of Girobank, would increase the area of competition. I am not at all sure that it would. If Girobank, which has established itself as a successful banking operation and created a clearly defined niche in the banking marketplace, is to be absorbed in another financial institution, it could lose its identity and its niche and the area of competition could thereby be reduced.

On many occasions the objective of mergers and takeovers, far from being to increase competition, is to diminish it. That could well happen in this case. I join the noble Lord, Lord Williams, in asking why, if there is to be a change of ownership, this successful banking organisation is not being offered to the public. Why is it not being offered to its own management to continue to run as a separate banking operation, expanding through its success and contributing more to competition, rather than being absorbed, possibly without trace, by a larger financial institution? I believe that that is an important and fundamental issue. I look forward to hearing what the noble Lord will say about that.

Secondly, I join with the noble Lord, Lord Williams, in asking about the rolling contract. One of the major features, if not the major feature, of Girobank's operation is the offer of banking services to small users in country districts who could not have such services otherwise. Those services could well turn out to be onerous and uncomfortable for the new owner to provide. Over a period of time, the objective might be to wind up those services. That would leave a gap in the banking situation which no other organisation could fill. How firm will the commitment be?

Thirdly, what will happen to the proceeds? This successful banking operation, based on its balance sheet and profitability, is obviously going to realise several hundreds of millions of pounds. That money will come to the Post Office. What will the Post Office do with it? Will it reduce the price of postal charges, improve postal services or both? We are entitled to ask what will happen to the proceeds. Will they be used for our benefit or in some other way?

Lord Beaverbrook

My Lords, I am grateful to the noble Lords, Lord Williams and Lord Ezra, for their questions. Perhaps I may first apologise to the House and in particular to the noble Lord, Lord Williams. While reading the Statement, I changed the first person singular to the first person plural. I accept that that changed the Statement slightly from the Statement which was in front of the noble Lord. I apologise and I am sure that the noble Lord accepts that there was no intention to change the meaning of the Statement.

Turning to the point made by the noble Lord, Lord Williams, about why I am repeating the Statement, the responsibilities of my right honourable friend the Chancellor of the Duchy are directly concerned with the Post Office and therefore with Girobank. It is appropriate that he has made the Statement in another place today and that I am repeating it rather than my noble friend the Secretary of State.

Lord Williams of Elvel

My Lords, I apologise for intervening at this stage. Does not the Secretary of State have responsibility for the entire Department of Trade and Industry?

Lord Beaverbrook

My Lords, the Chancellor of the Duchy is the Minister most responsible for the Post Office. That is why it is appropriate that he has made the Statement in another place. I emphasise that to the noble Lord.

The noble Lord, Lord Williams, asked why the Girobank is being sold off. As I have said to the noble Lord in debates on other privatisations, the Government believe that the business will do better in the private sector. It can develop there free from the many restrictions which apply in the public sector. The noble Lord, Lord Ezra, also raised that point. The Government accept that Girobank has flourished. However, it needs to expand and the Post Office agrees that it can do so subject to the same rules as other banks and without the additional controls that are applied in the public sector.

Lord Ezra

My Lords, I did not query the Government's intention of selling the bank off to the private sector; I queried the method that they propose to adopt.

4.45 p.m.

Lord Beaverbrook

My Lords, I believe that the noble Lord queried why it was being done, whether his query related to the method or the principle. However, I hope that to some extent I have answered his question.

As regards the point made by the noble Lord, Lord Williams, on how the decision to sell Girobank was arrived at, the Post Office Board was not in any way forced by the Government. The Government and the Post Office Board agreed that Girobank could develop best in the private sector. Therefore, it was agreed that the Post Office should sell Girobank. The Post Office was of course aware of the Government's general policies and agreed that Girobank should be sold.

The noble Lord also asked why the business should not be floated. We believe that at this stage, as Girobank is currently investing heavily in information technology and management information systems in order to put it in the forefront of competition, such systems should be operating before the bank can be a suitable candidate for flotation. At some stage in the future it could well be that those systems are sufficiently up and running to enable the business to be floated. However, at this stage the Government feel that that would be premature.

As regards foreign ownership, any proposal from a prospective purchaser from abroad would be evaluated on the same criteria as proposals made by any UK company. Any purchaser would need a licence from the Bank of England and would have to satisfy the Bank's prudential requirements. Those would be the full requirements under the Banking Act. In looking—

Lord Williams of Elvel

My Lords, does that exclude building societies, which are regulated by the Building Societies Commission under the Building Societies Act? They are not regulated by the Bank of England and do not meet the prudential requirements of the Banking Act.

Lord Beaverbrook

My Lords, I do not have an answer at the moment. I shall look into the matter. I prefer to answer the noble Lord after ascertaining the exact position; I should not like to mislead either the noble Lord or the House.

As regards the point made by the noble Lord, Lord Williams, on the rolling contract, I understand that either side can give notice on the contract. Details of the contract are commercially confidential. However, I can assure the noble Lord that the contract has been negotiated at arm's length and I understand that each side believes that it has won the best possible deal.

I am now informed that insurance companies and building societies would not be excluded from submitting proposals to Girobank. As regards the point made by the noble Lord, Lord Ezra, on whether the disposal will increase or decrease competition, I believe that with a suitable purchaser competition will be considerably increased. Girobank will be enabled to undertake activities which it is currently prevented from carrying out. At the moment, it is less competitive with the big four high street banks. After it is sold off there could well be activities that it could undertake, so that it could increase competition in the high street in banking services.

Lord Ezra

My Lords, I asked the noble Lord what assurance there would be that the purchaser would necessarily agree to Girobank doing all these things, or indeed to completing its substantial investment in information technology.

Lord Beaverbrook

My Lords, in looking at the bids for Girobank, we would very carefully consider plans that each potential purchaser had in respect of developing the business. The business can flourish only if the new owner is willing to undertake capital investment, investment in staff and investment in systems. The criteria that would be applied to assessing who was the successful purchaser would of course include looking at their plans for developing the business.

Lord Boyd-Carpenter

My Lords, my noble friend referred to "we" and to views as to the suitability of particular purchasers. Can he tell the House with whom the decision will lie as to acceptance or non-acceptance of particular bids by particular purchasers? Will it be the Government or will it be the Post Office? Who will take the final decision and be answerable for it to Parliament? Secondly, am I right in assuming that legislation will not be required?

Lord Beaverbrook

My Lords, if I may take my noble friend's second point first, I understand that legislation will probably not be required. As to the decision as to who will be the successful purchaser, I understand that both the Post Office and my noble friend the Secretary of State will be employing separate investment banking advice in this respect, but it is the Post Office that is actually selling. Of course it will consult the Government as to the choice of purchaser.

Lord Boyd-Carpenter

I am sorry, my Lords, but does that mean that the final decision is with the Post Office?

Lord Beaverbrook

My Lords, the Post Office is the owner of the business. Therefore I understand that, having consulted the Government, the board of the Post Office would be responsible for choosing the ultimate purchaser.

Lord Williams of Elvel

My Lords, may I confirm for our information that legislation will not be required for this proceeding?

Lord Beaverbrook


Lord Williams of Elvel

Not "probably", but not?

Lord Taylor of Gryfe

My Lords, may I make a general statement, as we usually do from these Benches on cases of privatisation? We have no doctrinaire attitude to privatisation versus public ownership and each case will be judged on its merits, but we have a strong inclination to support the idea of a mixed economy. In that connection I support some of the concerns which have been expressed.

First, since this is a very general Statement which talks about suitable candidates, suitable bidders and so on, without any clearly defined structure, and about rolling contracts that are ill-defined, I should have hoped that legislation or some other form of approval would be sought before this very dramatic change took place. I invite the Minister to respond as to whether there will be opportunities for looking at this in greater detail once we know the shape of the deal.

Secondly, I wonder whether the Minister is concerned about the impact in the public sector of this whole development. Some of us watched the Girobank from early days and sticky beginnings, and now it is a successful bank. But to say, "As soon as you are successful we will sell you off", is not an incentive to the employees and to management efficiency. It certainly is not morale building to know that at the end of the road you will be sold off.

May I ask the Minister to be a little more precise as to why a flourishing business of this kind will be sold off? He has not answered the question of the noble Lord, Lord Williams of Elvel. Is he at all concerned about the competitive aspect? He advocates competition, but what is happening now is the elimination of the one publicly owned sector in the banking industry, leaving no choice and no competition between the private sector and the public sector. Is there not a case in terms of his own philosophy of competition for retaining a public sector involvement in the banking industry?

I have sat on the boards of companies which have looked at Giro and have used Giro for commercial organisations because it was competitive. We compared it to other clearing banks' terms and made our decisions. We are going to lose that opportunity, because the clearing banks arc pretty well a closed shop. They frequently act in concert. But the Girobank was at least outside the magic circle. Is there no real reason in competitive terms, on the basis of the noble Lord's own philosophy for retaining this alternative system?

The Minister says that we can expect expansion. Is he sure about that? If this is acquired by a clearing bank or a building society with branches that are available in all the main streets, does he suggest that that guarantees expansion of the Girobank'? I cannot understand the philosophy that argues that you are expanding by being absorbed by a major competitor in the industry.

Finally, I repeat the question of the noble Lord, Lord Williams of Elvel. I am assuming from what the Minister said that foreign ownership of the Girobank would even he acceptable in this case since we are now in a period of free-for-all. Does not the Minister get a little alarmed about the fact that the TSB has now been privatised and building societies are now talking about turning into commercial banks? Does he not feel that this imporatnt sector of industry, with public ownership and mutual ownership alongside capitalist or private ownership, is something that should be safeguarded in a healthy democracy?

Lord Beaverbrook

My Lords, the noble Lord enters into areas of basic philosophy, and I am quite sure that I am not going to convince him today that the way in which we look at this matter is the one that he should follow. But I can certainly assure the noble Lord that the way in which he looks at this matter is not one that we are likely to follow. We believe that businesses should operate in the private sector where possible. We believe that they do better there, that they can develop better and can compete better, because they are able to operate away from the restrictions of government and to undertake all the functions of other businesses in the private sector. Girobank is prevented from carrying out certain functions that its rivals perform at the moment because of its existence in the public sector. So I believe that there is a very clear rationale for Girobank moving from the public to the private sector.

The noble Lord asked whether there may be an opportunity to debate the terms of any arrangement that may be made with a prospective purchaser. I can only say to him that it is of course open to him to take up this matter with the usual channels. If any debate should be arranged, of course I shall be very interested to participate and hear the noble Lord's views upon the terms that are arranged.

The noble Lord mentioned the expression "imprecise rolling contracts". There is no such imprecision in this rolling contract. It has been very carefully negotiated. It is a contract that has the full force of law and I believe will be a very satisfactory framework for the co-operation that will be necessary between post office counters and the privatised Girobank.

Turning to the interests of the customers and the employees, the noble Lord said that so often banks started off in a small way offering personal service and then grew, with the result that the personal service could diminish. I believe that when Girobank is privatised the management would be very foolish indeed to throw away its excellent reputation for dealing with its customers. When considering who are to be the shortlisted purchasers, the Government will of course take into account the potential purchasers' proposals for management and staff participation in the success of the business. I believe that there is a logic which ensures that the interests of those two groups of people will be protected.

I understand that the MMC will consider any deal that is put forward. The Director-General of Fair Trading has to look at any transaction worth over £30 million, so this prospective deal will have to be scrutinised in the normal way under the mergers control legislation. Therefore the director-general in due course will advise my noble friend the Secretary of State upon whether to refer any proposal to the MMC.

5 p.m.

Lord Harmar-Nicholls

My Lords, I presume that the Government have made up their mind as to their priorities. It may be that they want to obtain the best price that they can for this asset, and that is fair enough. They have built up from nothing an asset which now has a value. If they want to turn that asset into money now because they are not in a position to expand it any further and make it more valuable, there is nothing wrong with that. However, should they want to sell at the best price, I hope that they are not thinking of cluttering the transaction up with too many conditions and terms which will weaken the freedom of those people who will have to diversify and expand in the future, which, as my noble friend has said, is something to be hoped for.

Those two courses can never run together. If the price is wanted, one should sell and not attempt to retain management powers by inserting special conditions into the contract. I suggest that since there is no question of anybody being able to obtain a monopoly in this field—there are too many competitors in banking for that to happen—concentration ought to be on getting the best price. That should be done by offering or desiring the minimum of control once the asset has been sold. It should be allowed to compete in the market with the new people offering better or wider service. To try to have both things simply does not work.

Lord Beaverbrook

My Lords, before other noble Lords come forward with their questions, perhaps I may respond to my noble friend. An excess of what he describes as clutter in any deal that is made with the new owner of Girobank would be self-defeating. It would defeat the whole point of moving the Girobank from the public to the private sector. However, I should emphasise that the Post Office will take into consideration not only the price indicated by a prospective purchaser but also the support that the company may give to the development of Girobank, plans to use the counters network, the desirability of increasing competition in retail banking in the United Kingdom and of course the ability of the potential purchaser to meet the requirements of the Banking Act.

Lord Peston

My Lords, in putting forward this rather absurd proposition, the noble Lord said several times that the Government believed that the business would do better in the private sector. I am bound to say to him that he is standing both logic and history on their heads. The Girobank came into existence precisely because its business was not being undertaken properly in the private sector. The commercial banks have always been in a position to offer money transmission services of that kind and they failed to do so. That is precisely the point at issue. As I understand it, the Statement referred to the particular strength of the Girobank in money transmission, but that is a euphemism; the Girobank is superb in effecting money transmission. It is the commercial banks that have failed in this area.

I return to the point about competition. There is nothing to stop the private sector competing with the National Girobank. As the noble Lords, Lord Taylor and Lord Ezra, pointed out, the danger is that once it gets into the private sector, although it may stay independent, it may not. The one thing that we are guaranteed if it stays in the public sector is that it will be independent and will maintain competition.

Perhaps I may conclude by asking a question. I understand that one of the less successful commercial banks could make a bid for the Girobank. There is nothing to stop that happening. There is nothing to say, however, that that will increase competition. Indeed, it is pretty obvious that it will lower it. I do not think that this move is any other than a doctrinaire action. On any grounds of belief in competition and the working of free markets, the Girobank is one enterprise that absolutely ought to remain in the public sector and be encouraged to improve itself within that sector. It is perfectly capable of doing so, as the noble Lord, Lord Williams of Elvel, has said. It has access and is in a position to gain access to appropriate funds to undertake all the activities of the private sector.

We are taking immense risks with a major national asset. I ought to declare an interest and say that I certainly use it for money transmission purposes, as do many other noble Lords. I very much resent the Government fiddling around on purely ideological grounds with something of this kind.

Lord Beaverbrook

My Lords, I have already said that the Girobank developed very well in the public sector. However, we believe that it will develop faster and better under private ownership. The noble Lord, Lord Peston, raised the question of competition and I think it is a point which I have already covered. He spoke of the prospect of Girobank being bought and absorbed into an existing competitor, but I cannot see that that position is not safeguarded by the duties of the Director-General of Fair Trading.

Lord Peston

My Lords, I am sorry to interrupt the noble Lord but I must say that he cannot give us a guarantee of that. I cannot see, in terms of the normal criteria, that any of them would have a dominant market position. It would simply be a stronger market position and that would be a source of concern.

Lord Beaverbrook

My Lords, of course I cannot give a guarantee and the noble Lord would not expect me to do so. I was asked a question about competition and I answered in respect of how the competition policy of this Government is carried out.

Lord Morris

My Lords, I feel that I am not alone in being very concerned about this Statement. I hope that my noble friend appreciates that it will cause a great deal of worry for purely practical rather than doctrinaire reasons, not least in the City of London. Behind this scheme lie some fundamental conflicts of interest not least of which is the fact that any potential bidder who has any sense at all will look very carefully at the assets underpinning the shares that will be issued.

There are three fundamental assets of the Girobank. One is goodwill, which covers the professional skills of the staff and management. Another comprises a considerable amount of information technology hardware. The third and quite the most important is the so-called rolling contract between the Post Office and the Girobank itself. A contract invariably hangs on the good will of both contracting parties. I ask my noble friend not to repeat his words about a contract having the full force of law because when one goes to law it is already too late. No dispute can be properly settled if there is recourse to lawyers.

There is bound to be a situation of conflict between the postal and allied services and the banking services per se. I am convinced that in the end there will be conflict within the post offices themselves—between the elegantly dressed yuppie banking side of the Post Office and the postal services. There is bound to be dispute. One may move out of the premises, set up in competition with the local post offices or try to take over entirely the postal services. In other words, will they be post offices running banking services, or banking services running postal services? I see large problems there. Unless a potential investor can obtain contractual terms which are strongly on his side, he should think very carefully before even considering bidding.

Lord Beaverbrook

My Lords, my noble friend makes a good point, However, the best contracts are those which are operated with much goodwill on both sides. The post office counters will provide the retail outlets for Girobank. Girobank will provide considerable income for post office counters. There is a considerable shared interest here. Perhaps my noble friend is being somewhat pessimistic when he says that he believes there are areas of conflict. Of course there will be some areas for discussion, but I do not believe that the issues are insurmountable.

Lord Sefton of Garston

My Lords, the last statement was rather idealistic in assuming that the acquiring institution and the Post Office will work hand in hand. When Girobank was first established in Bootle there were other considerations for government. One was that they attempted to move from the South of England to the North of England an activity which would generate more economic activity.

I do not ask the Government why they are privatising Girobank. Long ago I made up my mind why they would do that. It is because the financial establishment in Great Britain never accepted Giro. To the financial establishment it was an intrusion into its affairs. Let us assume that one of the clearing banks will acquire Girobank. Does anyone believe that it will allow people to go into post offices to pay their accounts? Last week I rang up Telecom because I received a final notice for a bill that it was supposed I had not paid. What do I find? There was a delay inside British Telecom. When I rang British Telecom up and asked why the account had not been received, I was advised that I should change my way of paying the account.

I am concerned about the overall effect if an acquiring bank finds itself at odds with the Giro system and decides to do its best to get rid of it—because in fact it can. Why should Barclays Bank maintain another method for paying accounts into its branches but still support Giro? We know that it has always opposed the concept that a publicly-owned institution should involve itself in that aspect.

I ask the Minister a brief question but I wish for a clear answer. Was any consideration given to the fact that once it is in the private sector the private sector will determine where the head office of Girobank will be? If I am wrong, no doubt the Minister will tell me. The private sector will determine whether or not the main activities of Giro should be moved to the South of England where there is the biggest business. This may well be another step towards shifting economic activity from the North of England to the South. In coming to this decision, did the Government give that any consideration? If so, with whom did they discuss it?

When Girobank came to Liverpool, it was a typical example of good relationships between the major local authorities and the Government. Let me tell noble Lords what happened. The favourite site was in Liverpool, but there were some problems. Liverpool City Council was united in saying, "We do not care whether or not Girobank comes to Liverpool so long as it is on Merseyside". That is how it finished up in Bootle. That was a very good example of cooperation with central government. We finally achieved its siting in Bootle.

If Girobank goes out of the control of the Government and into the private sector, let nobody shirk this responsibility. The diminution of activity in Girobank at Bootle could have a catastrophic effect upon the social and cultural life of the people in that area because, of all areas in Merseyside, that was livened up and rejuvenated because of the existence of Girobank. I believe that the dogma of the Tory Party is responding to the people in London who have never liked Girobank. They have wanted to get rid of it and now they are achieving that aim. It is a damned disgrace.

Lord Beaverbrook

My Lords, I believe that the main thrust of the noble Lord's question was the matter of jobs on Merseyside. I cannot give any assurance as to the continuity of employment in Bootle or Merseyside, nor can the Post Office. However, Girobank is successful and ambitious. It has the majority of its facilities on Merseyside; I am fully aware of that. The benefits to Merseyside have been considerable. I believe that the Girobank management is very satisfied with the decision that was made to locate on Merseyside. However, I should say to the noble Lord that I fully expect it to be in the interests of any purchaser of Girobank to maintain those facilities.

Lord Sefton of Garston

My Lords, have the Government sought, or will they seek, any assurances from the acquiring bodies to maintain the head office at Bootle?

The Lord Privy Seal (Lord Belstead)

My Lords, perhaps I may intervene for a second. This Statement has attracted a lot of interest and I therefore did not wish to intervene. However, there are two points that I ought to make. First, the Procedure Committee of your Lordships' House recommended, and the House accepted the recommendation not so long ago, that Statements ought not to exceed 20 minutes. We have now taken very nearly 45 minutes over this Statement. On a day when we have debated only two amendments in the period of two hours before the Statement began, we seriously need to consider whether we are organising our time to the best of our ability.

Secondly, our Standing Orders for a very long time have recommended to the House, and have been accepted by the House, that we should not turn these discussions into a debate. I know that it is very easy to extend the time and slip into discussion on a subject that has attracted a lot of interest. Perhaps I may end by suggesting that we take the question of the noble Lord, Lord Aylestone, and the House may then consider it right to continue with other business. Perhaps I may have a word with the Leaders and the Whips to see whether we can streamline our arrangements for Statements and return with recommendations by the Procedure Committee of your Lordships' House for acceptance by your Lordships.

Lord Aylestone

My Lords, it is one brief question which I assume that the noble Lord has forgotten to answer. I refer to a question from the noble Lord, Lord Ezra. What happens to the proceeds from this sale?

Lord Beaverbrook

My Lords, I have already indicated that the Post Office is selling Girobank. The Post Office will receive the proceeds. However, I should say that the Post Office lends surplus resources to the Treasury. It has agreed with the Government that resources that are surplus to its own requirements can be lent back to the public sector.