The Post Office: Competitiveness (Hansard, 2 February 1995)

The Minister of State, Department of Trade and Industry (Earl Ferrers)
My Lords, commercial freedom and proper constraint over the use of public money are not easily compatible objectives, but we are engaged in widening the opportunities for Post Office Counters and are helping to automate its services.

§ Lord Ezra
My Lords, I thank the noble Earl for that Answer. Nevertheless, will he agree that the Post Office is now in a somewhat anomalous position of having not only to pay profit tax like everyone else but also to hand over to the Treasury more than what is left in addition? In that situation, how can the Post Office have sufficient funds to invest in order to face up to the competition which everyone agrees it has both domestically and internationally? In that connection, will the Minister indicate what the Government are doing to give further consideration to the points for greater commercial freedom for the Post Office under public ownership as set out on page 15 of the Green Paper which was issued last June?

Earl Ferrers
My Lords, the Post Office has always paid money to the Government. Indeed, the 1589 Post Office has invested £1.7 billion in real terms over the past five years; it has paid Her Majesty's Government £475 million in the past five years; and it made a profit of £98 million before tax in real terms during the same period. Post Office Counters is taking on extra business. For example, it is taking on aspects like travel insurance; people can now pay their gas bills over the counter; it is selling National Lottery tickets; and, indeed, one can even buy fishing licences. However, I agree with the noble Lord in that it is very difficult to get full commercial competitiveness and full commercial investment if one is constrained by being a public company.

§ Lord Wyatt of Weeford
My Lords, now that his Government's majority is growing daily more secure, does the noble Earl agree that he should advise the President of the Board of Trade to have another go at a proper privatisation and not continue to muck about with halfway houses which are unsatisfactory in every possible way?

Earl Ferrers
My Lords, the Government's majority is totally secure—

§ Lord Mellish
In this House.

Earl Ferrers
My right honourable friend the President of the Board of Trade is not "mucking about", as the noble Lord put it so gracefully; indeed, he is quite determined. The preferred option is the one which my right honourable friend has always suggested and which he has gone for. However, if Parliament in its wisdom does not think that that is an appropriate result, we have to do the best that we can in the circumstances in which we find ourselves.

§ Lord Clinton-Davis
My Lords, does not the Minister perceive that there is something slightly contradictory in the Government's stance? For example, is it not a fact that they have said that it would be unfair to privatise because it would offer advantages to the Post Office over private competitors? But did not that argument occur to them when they wrote off literally billions of pounds when privatising a certain number of other industries? Did they not secure unfair advantages?
Further, as regards the answer that he has just given, does the Minister not realise that encouraging Post Office shops to engage in all those additional trading activities will surely provide some competition with the private sector? Even when it comes to the PFT, does not the Minister see that projects in which the Post Office might be involved would give it the sort of so-called "unfair competition" competitive advantage? Why are the Government immersed in such pure ideology when other governments are enabling their publicly-owned post offices to have precisely those advantages?

Earl Ferrers
My Lords, I observed the noble Lord sitting on the Front Bench thinking like mad and I wondered what curious supplementary question he was going to ask. The noble Lord knows perfectly well that the reason why the Post Office cannot receive the investment that it requires is due to the fact that 1590 it is still in the public domain. You cannot give to a public company the reward of not being able to go bankrupt but yet all the advantages of competition. That is the reason why we wish to see the Post Office privatised.

§ Lord Clinton-Davis
My Lords, why was it put forward as an option in the Green Paper then?

Earl Ferrers
My Lords, curiously enough there were three options and the preferred option was not one of those.

§ Viscount Slim
My Lords, in reference to the Question of the noble Lord, Lord Ezra, on the competitive edge of the Post Office, is it not a fact that the Post Office has decided not to have any commemorative stamps, sets or first editions to commemorate the end of World War II? Surely that would not only be profitable and, with some market vision, useful to the Post Office, but also the nation would expect it. Can the noble Earl explain that to me?

Earl Ferrers
My Lords, if the noble Viscount would like to put down a Question about stamps, I should be delighted to answer it, but I think it is rather far removed from the Question on the Order Paper.

§ Lord Ezra
My Lords, following on the question put by the noble Lord, Lord Clinton-Davis, is the noble Earl aware that Australia, Canada, Denmark, France, Germany, the Netherlands, Singapore and other Far Eastern countries, while retaining postal services under public ownership, have nevertheless enabled them to borrow money externally, to enter into partnerships and to operate commercially? If all those countries can do it, why cannot we find an answer to the problem?

Earl Ferrers
My Lords, for the simple reason that the Treasury and the Government cannot be expected to give a commercial operation unlimited backing to prevent it from going bankrupt. That is not fair competition for those who have to compete with it without such security.