HL Deb 19 May 1994 vol 555 cc364-77

4.15 p.m.

The Minister of State, Department of Trade and Industry (Lord Strathclyde)

My Lords, it may now be a convenient moment to repeat a Statement being made in another place by the President of the Board of Trade. The Statement is as follows:

"With permission, Madam Speaker, I would like to make a statement on the Post Office. I announced on 29th July 1992 that the Government would be considering the future structure and organisation of the Post Office. I made clear then that we would consider a variety of options both in the public and in the private sector. In March, the Trade and Industry Committee published a report on the future of the Post Office. We have considered this carefully.

"The Government have now decided that they will shortly publish a Green Paper setting out the issues in full and outlining the options for change. In view of the intense speculation of the last two days, however, I thought it important that I should make this early report to the House.

"The Post Office is an essential part of our national life. It provides at least one daily delivery of mail throughout the country at a uniform tariff, which is the same regardless of whether you live in Westminster or the Western Isles. It handles some 60 million items of mail per day. Perhaps most importantly of all, it maintains a network of some 20,000 post offices which serve their local communities in a way which no other organisation can match.

"The Government therefore made their consideration of the Post Office's future subject to three vital and non-negotiable commitments, all of which we clearly set out in our manifesto. These are: first, the maintenance of a nationwide letter service with delivery to every address in the United Kingdom; secondly, a uniform and affordable structure of prices; and thirdly, a nationwide network of post offices. Under no circumstances would we put these commitments at risk.

"There are three principal businesses of the Post Office, namely Post Office Counters, the Royal Mail and Parcel Force. The Green Paper will outline a number of options but I can announce some firm decisions today.

"Let me begin with the counters business. Every Member of this House is well aware of the vital importance of the network of post offices, particularly in rural areas but also in our towns and cities. The Government fully recognise the key role which they perform in our communities. That is why the maintenance of a nationwide network is non-negotiable.

"The counters business is essentially a partnership between the public and private sectors. The central core, which negotiates contracts and provides back-up services, is government owned. But the vast majority of post offices—all but some 800 of the 20,000 outlets—are privately run sub-post offices operating under an agency agreement.

"The Government can see no case for changing this structure. It works well. It ensures that the Government retain the necessary control over the maintenance of the nationwide network. It allows for private sector initiative at local level where the local post office is at the heart of local communities.

"During the course of the review, however, the case has been put forcefully, particularly by the National Federation of Sub-Postmasters, that the commercial prospects of the post office network need reinforcement. I understand and share that view. Most post offices are small shops and the Government understand the pressures on such shops as a result of social change. We are therefore intending to proceed with two measures specifically designed to improve their position.

"First, we will be giving Post Office Counters greater freedom in future to seek new clients from the private sector to supplement its existing client base, which consists largely of public sector bodies. The best way of maintaining the network is to give it freedom to compete, on fair terms, for new business and thus increase the spread and scale of its activities. The Green Paper will set out our proposals.

"Secondly, we propose to automate many of the clerical procedures which lie behind much of the business of the network. These procedures—par-ticularly those related to the payment of benefits— have been unchanged for decades. Work is thus under way between the counters business and the Benefits Agency to devise a method of automating the payment of social security benefits. This will not only provide an extremely cost-effective way of paying benefits but will also provide an electronic platform in post offices enabling the business to provide enhanced services for all its clients, new and old. Work on this project is at an early stage but we are looking to extend the public/private sector partnership by the involvement of the private sector in the management and funding of this project.

"I would like to comment on the relationship between counters and Royal Mail. Royal Mail does not cross-subsidise post offices. Post Office Counters has been run as an independent business since 1986 and has been profitable throughout that period. Some individual post offices in rural areas do, of course, make a loss on a strict accounting basis. Counters has the existing powers to support such post offices. Indeed, at the present time 2,700, of which 1,800 are part-time, are already supported by a flat fee regardless of the business they undertake. Post Office Counters and their clients see the nationwide network not as a liability but as an asset which enables counters to provide a unique service to villages and hamlets throughout the land. It enables the Benefits Agency, for example, to provide a service for the millions of people who have no bank accounts and live in remote areas.

"The business link with Royal Mail is, of course, also important, though Members may be interested to know that only about 25 per cent. of counters' turnover comes from the Royal Mail. However, in any proposals the Government will require the Royal Mail in future to continue to use post offices, as they do at present.

"Let me now turn to Royal Mail, which accounts for over 70 per cent. of Post Office turnover. It is the most efficient postal service in Europe. It is a modern, profitable business. It is looking to expand into what is rapidly becoming a European and even a world market for postal services. This is itself only a part of a global communications market which is one of the most innovative industrial sectors of all. "The Post Office board wishes Royal Mail to be free of many of its constraints. Indeed, the board has; made clear that increasing competition in the market place is beginning to pose a real threat to its ability to maintain its current performance. The Trade and Industry Select Committee in its recent report accepted that argument. The Government also recognise the case for change.

"The Green Paper will set out the options showing the advantages and disadvantages and in particular the case for retaining a substantial minority shareholding in a newly created public company. In addition, preferential share entitlements for the employees of the Post Office and the sub-postmasters would ensure that a significant holding of shares would be in the hands of those people most immediately concerned with the future of the business. The Green Paper will also set out an option for retaining the business in the public sector but extending its commercial freedom as far as is consistent with continued public sector status.

"Let me emphasise that none of these options would in any way reduce the social obligations placed on Royal Mail. To ensure this, any legislation would set up a regulatory system to ensure that these are properly defined and policed. The Government's commitments to universal delivery —six days a week to every household—with a uniform and affordable tariff remain non-negotiable and would be written on the face of the legislation. Tariffs would be controlled through regulation. Experience has shown that social commitments can be delivered through strong regulation; for example, regulation requires BT to provide telephone boxes in rural areas. In the same way it would be our intention to require Royal Mail to maintain its letter services in rural areas.

"I turn now to Parcel Force. I announced on 15th July 1992 the Government's intention to privatise Parcel Force, which already operates in a fully competitive market. Work has been going on since then on the best method and timing of the sale of Parcel Force. Of necessity, we have done so in the light of the Post Office review. It would be possible to continue with our original plans. But there are important synergies which exist between Parcel Force and Royal Mail. The Government have decided to include Parcel Force in their new proposals for Royal Mail. We will, of course, pay particular attention to the need to avoid any unfair cross-subsidy from Royal Mail to Parcel Force.

"Before concluding, can I reassure the House on three specific points. First, it has been suggested that any change of status would lead to VAT on stamps. That is simply wrong. I can assure the House that under any proposals we finally adopt stamps will continue to be exempt from value added tax. The second is pensions. I can assure the House that all existing pension rights will be preserved in any case.

"Thirdly, the House will be aware that the Post Office, and in particular the Royal Mail, has long had important connections with the monarch. I am pleased to announce to the House that after consultation Her Majesty has agreed that, if a public sale option were to be pursued, Royal Mail would be given permission to use a depiction of Her Majesty's head on postage stamps; to use the Royal emblems, the crown and the cypher; and to be registered as Royal Mail plc at Companies House.

"I will soon be bringing forward a Green Paper setting out the options and the Government's preferred proposals. That will allow an opportunity for a full public debate of this complex area.

"We are committed to increasing the opportunities for the Post Office and post office network and to ensure that the national standard of service is maintained. We will wish to ensure in any change that the interests of the consumer continue to be protected by effective regulation. There is common accord that major change is needed if the Royal Mail is to meet the growing competitive threat that it faces.

"The Government believe it important to allow the Royal Mail to build on the excellence of its reputation and to compete both at home and internationally where the quality of its achievements and the reputation it enjoys offer an exciting future. We hope to make rapid progress to enable this major British organisation to achieve its ambitions". My Lords, that concludes the Statement.

4.26 p.m.

Lord Peston

My Lords, I thank the Minister for repeating the Statement. However, I find it somewhat bizarre and have great difficulty understanding what the House is being told. We have the oldest Post Office in the world. Judged by world standards, we have a Post Office which is profitable, which is efficient and which can be relied upon. Of course it could be better. But doing better is precisely what the Post Office has been demonstrating. It has been doing a good job and has shown that it can proceed to do a better one. Indeed, in my judgment the only thing holding back the Post Office is the Government. The best thing that the Government can do is to stop interfering with that public agency and let it demonstrate what it can do. The evidence is that in this case the public sector and public service can do a first-class job. But that is precisely what the Government seem to be afraid of.

Let me quote the Government themselves. Essentially, the noble Lord said that we have the most efficient postal service in Europe—a modern, profitable business. For goodness sake, why are the Government proposing to mess about with it in any way whatever? Put at its mildest, it is daft.

The Government use the word "non-negotiable". Will the Minister say what "non-negotiable" means? Whenever I hear that word, warning signals sound immediately, telling me that the real meaning is "negotiable". Why go to all that trouble?

Can the Minister say whether the word "uniform" used in reference to prices means "equal"? Does it mean that we all pay the same price for delivery wherever delivery takes place? In my judgment, "uniform" does not mean "equal". But is that the Government's intention?

What does "affordable" mean? Does "affordable" mean "cheap"? That is the kind of problem I have with the Statement. It is said that a nationwide network is non-negotiable. The words are "a nationwide network"; not "the nationwide network". Am I right in thinking that the Government in fact mean "the" and not "a"? The whole Statement is fraught with problems.

The main problem relates to the actual wording that the noble Lord used in relation to the Green Paper. I was convinced, until the noble Lord spoke, that there must be a serious misprint in the Statement. We see the sentence, The Green Paper will set out the options showing the advantages and disadvantages", and so forth. At no point does it say that it will set out what the options are and what are the advantages and disadvantages of the points we are considering. Indeed, the word "privatisation" does not appear. Can the noble Lord say whether one of the options is privatisation? One of the options appears to be continued "public sector status". The least we need to be told is whether or not the Government are actually proposing to privatise.

There are statements of Government commitments. The expression appears that certain matters will be, written on the face of the legislation". But I must warn noble Lords, though this will not come to us for a fortnight or so, that nothing of that sort will mean anything any more if we pass the deregulation Bill. Once that Bill is passed there is nothing to stop Ministers deciding that, by order, they will remove this or that on the grounds that it is too costly for their friends in the private sector. I raise that point now. I shall raise it again in more detail in two weeks' time. It is one of the reasons we must be careful when considering remarks like "we are committed" and "this is non-negotiable".

I now propose to ask about a matter of some delicacy. I was concerned about the depiction of Her Majesty's head by an enterprise which will be in the private sector. I was deeply concerned about that before this matter was raised. However, the noble Lord told us that Her Majesty herself is not concerned about it and I am therefore unable to pursue it. I felt that I should say that some of us were worried about that before the Statement was made. I can say no more on that at this time.

The question that puzzles me, since there seems to be conflict of fact, relates to what is happening in other countries. According to my information, other countries —notably France and Germany-—are not thinking of privatising their mail delivery services. Can the noble Lord say anything about that? There is talk of competition from abroad. Again, there is evidence and argument that competition from abroad is not possible; it would infringe the universal postal union agreement. Can the noble Lord give us some clarification on the question of competition from abroad?

Finally—I am sorry, not quite finally—I must raise the question of sub-post offices. The Government are essentially saying that sub-post offices are safe; that that is one of the non-negotiable areas. My judgment is that I do not see how their safety can be guaranteed if we eventually move in the direction of privatisation. Certainly if I were a sub-postmaster or sub-postmistress I would feel extremely threatened by the Government's proposals and particularly by their ideology. I would be most fearful for my future.

In that connection I am somewhat mystified—that is why I say it is not quite finally—by the reference to the fact that post offices are not subsidised, yet the remaining sentences in that paragraph seem to suggest that some rural post offices make losses on a strictly accounting basis. If they survive, that is what subsidisation means. If they receive a flat fee regardless of the business they undertake, then according to my understanding of economics, that is cross-subsidisation. They are being given, quite rightly, special treatment.

I am most perturbed by the Statement and by its rather ad hoc nature. Of course I shall wait for the Green Paper and perhaps one day a White Paper. I should like to know whether the Government have any cogent arguments. I doubt that they will be able to put forward any powerful arguments in support of privatisation. For the moment the best thing I can do is keep my powder dry but warn the Minister that if we eventually join battle on this field we shall fight as vigorously as we can to defeat the privatisation proposals.

Lord Ezra

My Lords, I welcome this Statement for two reasons. First, it was right for the Government to come up promptly with the Statement after all the press speculation. Secondly, many will be relieved at the three firm commitments that the Government made: namely, to maintain a nationwide letter service; to provide a uniform and affordable structure of prices; and to sustain a nationwide network of post offices. That is all very positive.

However, I join with the noble Lord, Lord Peston, in asking a number of questions about the implications of what comes afterwards. Like him, I was somewhat puzzled, hearing the positive and proper way in which the Government paid tribute to the success of our postal service—which has changed beyond recognition in recent years and become a highly profitable and efficient organisation—as to why at this time we are thinking of introducing changes.

Before the noble Lord thinks of his reply to that, I am sure he will say that there is competition and technological change. That is so. But why cannot those matters be taken on board by a properly run public enterprise? As someone who has been in public enterprise for many years, I believe that one of the reasons for the alleged failure of public enterprise was the constant intervention of government and particularly the peculiar financial controls. Whether or not the enterprise was profitable, the financial controls were such as to make it impossible for it to be run on a rational basis.

For example, in relation to the Post Office, the Government apply a form of negative cash limit. That means that it must contribute to the Treasury what the Financial Times this morning estimated to be twice the amount that, if it had been declaring a dividend on its results, would be declared as dividend. There are many questions being asked these days about the relatively high dividends being paid in the private sector and why there is not more reinvestment. Therefore, why are the Government charging the successful Post Office twice the amount that any private sector company in a similar position would be paying out by way of dividend? In other words, why is it being deprived from ploughing back a lot of its well-earned profit into making itself more efficient in the future?

I hope, therefore, that when we are given the various options the issue of whether or not the postal service in general—the Royal Mail as well as Post Office Counters —should remain in public ownership but with much greater commercial freedom and freed of that peculiar financial constraint, will be fully explored. The Government will earn a lot of commendation if they are able to show against all past experience that it is possible, in the public interest, to own a major enterprise which is successful in the operation of its business and regulated in such a way that it can build on its success.

The Statement read out by the noble Lord ended by saying that the intention of the Government was to enable the Post Office to build on its success. I believe that that would be one way of enabling it to do so.

Lord Strathclyde

My Lords, the noble Lord, Lord Peston, said that he was perturbed about the Statement. What perturbed me was the fact that the noble Lord, Lord Ezra, was so welcoming of it. He congratulated the Government on making the three firm commitments to protect the various interest groups that rely on the future of the Post Office. Indeed, I was grateful for the opening words of the noble Lord, Lord Ezra.

I join with the noble Lord, Lord Peston, when he says that the Post Office is doing a good job. Of course it is. The noble Lord went on to say that we should stop interfering. But that is one of the problems. When governments own organisations there is a temptation to interfere, to control and be involved. It is one of the natural reactions of being in politics and having a Civil Service and a Treasury. That is why we are investigating a number of options—to see what possible changes can be made.

Both noble Lords asked specific questions which I should like to answer. I say to the noble Lord, Lord Peston, that, as I said earlier, when we talk about things being non-negotiable we like the phrase to mean exactly what it says. So we will preserve the important aspects of the workings of the Post Office which are recognised by people all over the country as being important to their life styles. That goes for uniformity, which means we shall provide for equal pricing and for equal sale of the product right across the country.

When it comes to looking at the options, the Statement makes clear—I recognise that it was a lengthy Statement—that we see no case for changing the current structure of Post Office Counters as it works well. So one of the options is not to privatise Post Office Counters. However, we should like to take a more radical look at whether the Royal Mail could find an appropriate place within the private sector, though naturally well supported with a substantial ownership by government and indeed by the people who work within the Royal Mail. We know that the world business structure is changing. We understand the case for the Royal Mail to look to expand and develop in order to capture a share of the new markets, particularly international markets.

The noble Lord, Lord Ezra, asked what is happening in other European countries. I understand that in the Netherlands the Dutch Post Office is already heading down the path of partial privatisation. In Germany there are initial plans for splitting up its posts and telecommunications network and for progressively selling it off. I have no information on the situation in France. But what this demonstrates is an increasing awareness internationally that Post Offices could compete with each other, and the British Royal Mail should not be held back from its desire to compete as well.

The noble Lord, Lord Peston, asked about the cross-subsidy. There is a cross-subsidy of Post Office Counters with some rural post offices, which are now unable on a strict accounting basis to make a profit. They are paid an agency fee by the central organisation, but it is that central organisation whose structure we have declared ourselves most satisfied with.

As for the deregulation Bill, that is a matter which will be exercising our minds during the hot summer months in the near future. I do not think we need to be overly concerned about how the deregulation Bill could affect the future of the Post Office.

This Statement is not a negative Statement. It is an extremely positive Statement, making sure that the Post Office network can provide the very best service to its customers in the United Kingdom and can compete effectively abroad at the same time.

4.43 p.m.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that the House as a whole is very grateful to him for making this Statement, that it will be even more grateful when the Green Paper appears and that it will be even more grateful still, seeing the Leader of the House present, when it is given the opportunity, which it will very much want, to debate the Green Paper. I hope that my noble friend the Leader of the House is making a mental note of that at this stage.

There are two aspects of the Statement which I was very glad to hear. One is the intention to extend the scope of the Royal Mail. I am sure that very considerable extension is possible, that it will be profitable and that it will be very helpful. Perhaps my noble friend can add a word or two of further detail on the matter.

Secondly, I was very much relieved to hear that Post Office Counters is to be left intact. It is a vital part particularly of our rural economy. If the Government were to be tempted to interfere drastically with it, it would be a pity. On the other hand, if the Government can find further scope for Post Office Counters, in particular by making sure that it is allowed to be profitable through extending the scope of its business, that would be extremely helpful, not only to the Post Office but to the rural community as a whole. Perhaps my noble friend will comment on that.

Lord Strathclyde

My Lords, I know that my noble friend the Leader of the House made a mental note of my noble friend's recommendation that there should be a debate on the Green Paper. No doubt in the fullness of time he will come to a view as to whether that is the way forward.

I am grateful to my noble friend Lord Boyd-Carpenter for making a positive noise about the Statement. It provides the Royal Mail and Post Office Counters with a substantial opportunity. There are many services which cannot currently be provided by the Royal Mail—some for reasons of public sector finance and some for other reasons. But if the option was adopted to go down the private sector route there would be the opportunity to provide a variety of services; for instance, a single service to provide printing, sorting, enveloping and, ultimately, delivery services for a whole variety of organisations that need such services.

My noble friend is also right about extending the scope of Post Office Counters. One factor that has held up the development of Post Office Counters has been its inability to sell certain items or indeed to operate for third parties; for instance, banks and mail order organisations. That is the kind of information that we wish to receive from our consultation on the Green Paper. We wish to see exactly what kind of scope exists for extending those opportunities.

Lord Stoddart of Swindon

My Lords, this is an outrageous Statement, but the noble Lord will be relieved to hear that I shall save my outrage for another day. I should like to ask a few questions instead. First, the noble Lord said that there would be a guaranteed six-day service. Will that be first and second delivery? Will the Government guarantee the second delivery as well as the first?

Secondly, he gave an assurance that there would be no VAT on postage stamps. We all remember that during the general election the Government said that there would be no extension of the scope of VAT. Yet a year after they won the election VAT of 17.5 per cent. was imposed on domestic fuel. Will it be written into any Bill that there will be no VAT on stamps? Can we have an answer to that question?

Thirdly, my noble friend on the Front Bench raised the issue of equality of treatment. When the Gas Bill was going through the House we were assured that there would be standard rates throughout the country. We were told that those would be guaranteed. We now hear that under new provisions people in the South West may be paying more for their gas than people in East Anglia. Can"we have an assurance that there will be a guarantee of standard prices for all time throughout the country? How many jobs will be lost?

Finally, if the public reject, and firmly reject, the Green Paper, does that mean that the Government will drop their proposals?

Lord Strathclyde

My Lords, the noble Lord, Lord Stoddart, describes the Statement as outrageous. I venture to suggest to the noble Lord that he has not had enough time to think about the delicacy of the consideration we have given to this issue and about the important safeguards set out in the Statement. They are important and precisely the kind of safeguards I know the noble Lord would wish to see; namely, the three commitments that were so welcomed by the noble Lord, Lord Ezra.

The noble Lord asks specifically whether there will be first and second deliveries on the six days. In some parts of the country there is not a second delivery. So in those parts of the country we would not be guaranteeing a service because there is not one. We hope that if we were to take the privatisation option, that, as has been true in so many other privatisations, would improve the quality of service. We would have more collections and deliveries throughout the country.

I know that the noble Lord, Lord Stoddart, will not accept my words or those of the Government when it comes to making a statement on VAT. But I can assure him that we have no intention and no desire—and we are not obliged by European Community regulations in which I know he has a great interest—to introduce VAT.

Lord Clark of Kempston

My Lords, does my noble friend agree that each time the Government have tried to transfer businesses from the public sector to the private sector the Opposition have always objected? Does he further agree that despite that objection, our privatisation programme has been extremely successful and has been copied throughout the world by competing countries? Does my noble friend also agree that as regards the Royal Mail, the very fact that the employees will be able to become shareholders is a step in the right direction? That gives an impetus to the wider share ownership and the creation and distribution of wealth which this Government have carried on since coming to office. Finally, does my noble friend agree that the fact that the local post office system is going to remain intact is something which will endear itself to the public?

Lord Strathclyde

My Lords, I would expect my noble friend to be supportive. He has used his particular wisdom and experience to be doubly so. My noble friend is absolutely right. Time and time again the Opposition have chastised us over government policy and time and time again they have been proved wrong. The wisdom of the Opposition is clearly in great doubt, not just on this matter but on so many others.

My noble friend spotted something which is very important and which should be at the heart of the Opposition's policy; that is to say, the creation and distribution of wealth. We distribute wealth by giving people the opportunity to do the best for themselves. That is why one of the central planks of any potential future privatisation will be employee ownership schemes to make sure that the people who are most affected by these changes will also be the greatest beneficiaries.

Lord Ewing of Kirkford

My Lords, is the Minister aware that in all the other privatisations; where preferential share ownership was granted to employees 84 per cent. of the shares were sold, some within six weeks of allocation? In only one case, where a two-year limitation was built in as regards the privatisation of British Gas, were the employee shareholdings held for any length of time. As regards today's Statement, is the Minister aware that there is not a country in the world that has its post office system in the private sector? Nor is there a country that has its counter service separated from its letters and parcels service. All have an integrated postal service.

The Netherlands—although the situation may change because of the election recently of an albeit minority Labour government—has gone down the road of experimenting with market forces, and the number of deliveries, for example, in Amsterdam, has been reduced to five compared with 11 deliveries in London, Glasgow and Edinburgh. Even in the Netherlands, if the decision were taken to privatise the service, it would still be in the public sector because the government are under a legal obligation not to sell more than 49 per cent. of the shares held in the Netherlands post office. In New Zealand—another to have experimented with market forces—tariffs have gone up by 116 per cent. So there is no evidence throughout the world to justify what the Minister and his right honourable friend in another place have been saying in the Statement today.

My final question to the Minister is this: will he check his facts as regards British Telecom? He said that it is under a statutory obligation to place telephone kiosks in rural areas. The 1984 legislation as regards British Telecom is quite clear. British Telecom is under an obligation to place telephone kiosks in rural areas only—and these words are very important indeed— where they are economically viable. That is what the Act says. It does not say that British Telecom is under an obligation to place kiosks in rural areas. Indeed, the local government legislation was altered to enable local authorities to make a contribution to maintain a telephone kiosk in a rural area when British Telecom was going to remove it because it was uneconomic. The Minister will go one privatisation too far if this Government dare to attempt to privatise the Post Office.

Lord Strathclyde

My Lords, I am sure that the noble Lord would be delighted if it did turn out to be one privatisation too far. But we have not yet made a decision about whether privatisation is the correct route. The Statement is about publishing a Green Paper in order to have a broadly based discussion about what the future structure of the Post Office should be. We have made various commitments which are non-negotiable and we have looked ahead at what kind of proposals could be suitable for the Royal Mail.

The noble Lord, Lord Ewing, began with a comment on ěmployee share ownership. We will look at past privatisations to study the experience of those measures. There are a number of potential schemes which could be brought to bear. All I am making clear is our commitment to involve employees in ownership of their own company, which I believe is important.

The noble Lord said that no other country has tried this. All that shows is that yet again the United Kingdom is in the vanguard in looking at state ownership and privatisation in a radical way and offering real opportunities. I can assure noble Lords opposite that where we go other countries will follow soon enough. Perhaps I may briefly answer the question about British Telecom and rural phone boxes. I understand that although the 1984 Act is, as the noble Lord remembers, under the licence obligations—in other words, under the regulatory system—there is an obligation to keep existing phone boxes open. That is why today throughout the British countryside we still see phone boxes.

Lord Hailsham of Saint Marylebone

My Lords, may I be forgiven if I ask a slightly inquisitive question? I was greatly heartened by a great deal of what my noble friend said in answer to the last question. I am greatly heartened by the fact that the paper is green and not white. Perhaps my noble friend and the Leader of the House will agree with me that it is obvious that we really cannot tackle this problem until the Green Paper is seen and read. Therefore there must be some limit to what I can press my noble friend about.

I have spent most of my life in the Conservative Party. I have the feeling that the party itself is not united about this matter. If I understood my noble friend correctly, I am greatly heartened that in the Green Paper one of the options which is being considered, among others, is the retention of the Post Office as a nationally-owned enterprise. I am not asking my noble friend to go down every avenue and leave no stone unturned. Some of us are proud of our Post Office and I expect that the Government are too. We do not want radical changes. I understand that this is consistent with what my noble friend said; namely, that one of the options which should still be open is that which was put by Lord Melbourne to the bright ideas boys in his government many years ago. He said, "Why not leave it alone?"

Lord Strathclyde

My Lords, I am delighted that there is no disagreement between my noble and learned friend and myself or the Government on this issue. The Statement we have made today is an announcement of the publication of a Green Paper. Ideally, we perhaps would not have wished to make the Statement today, but in the light of intense press speculation over the past couple of days it would have been unfair to allow people to believe that the Post Office was under a substantial threat when we knew that we wished to maintain enormous protections so as to provide a valuable Post Office service for the future. Of course, one of the options will be to look carefully at the current regime, but we are faced with changing circumstances in terms of technology and international competition, and it must be right that we should at least look radically at various alternatives.

Lord Monkswell

My Lords, the House will be pleased to know that the President of the Board of Trade has not lost his political touch in the sense of leaking a proposal and then making a Statement to Parliament to get it onto the record. A number of noble Lords have alluded to the fact that the national postal service is almost a consequence of the nation state itself. The Minister said that the Green Paper will pose a number of different options. Following the experience of the United States, which has a federal postal system, has the option of a European postal system, answerable to the European Parliament, been considered?

Lord Strathclyde

My Lords, I should be surprised if such a suggestion were to creep into the Green Paper. I cannot go into any details of the Green Paper because some decisions still have to be made. I believe that when it is published noble Lords from all around the House will be encouraged by its breadth and wisdom, and no doubt it will take carefully into account some of the suggestions that have been made by noble Lords today.

Lord Dean of Harptree

My Lords, perhaps I may ask my noble friend two questions about rural post offices which are such a vital part of village life. First, what will be the relationship between the Royal Mail and post offices? Will the Royal Mail be obliged to continue to use post offices? Secondly, my noble friend mentioned the possibility of new clients for sub-post offices. Can he give the House any indication of who those new clients might be, and whether the Government can give post offices any assistance in obtaining new clients?

Lord Strathclyde

My Lords, I should like to reassure my noble friend about the role of rural post offices. They clearly provide a tremendous social benefit to the people who use them, which is why we believe that the Post Office Counters network should be retained by the state. If we were to go down the road of any form of privatisation—splitting roles between the Royal Mail and Post Office Counters—we should make it an obligation upon the Royal Mail to use Post Office Counters and therefore to maintain that link. As to the question of new clients for Post Office Counters, there is a whole range of potential clients who would like to use the confidential and safe service of Post Office Counters; for instance, banks and other people transferring cash. Earlier I mentioned earlier mail order networks. A whole range of services could be provided for local communities which Post Office Counters is currently debarred from operating.

Viscount Ullswater

My Lords, I believe that 20 minutes have elapsed and that we should continue with the Third Reading of the Social Security (Incapacity for Work) Bill.