The Post Office: Future (Hansard, 24 January 1996)

§ The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)
My Lords, the Government's plans for the future of the Post Office were set out in a Statement in another place on 11th May 1995 by the President of the Board of Trade.

§ Lord Ezra
My Lords, in giving that Answer, has the noble and learned Lord read that Statement carefully recently? Among the criteria set for the greater commercial operation of the Post Office was included the comment that the amount of money that the Government would recover in the form of a negative EFL (external financing limit) would be about half of its post-tax profits, whereas in the event after the last Budget that was doubled and as a result the Post Office has now announced that it may well have to raise the cost of postage stamps despite being a highly profitable organisation. This matter was raised in a Question by the noble Lord, Lord Haskel, on 18th December.
Does the noble and learned Lord further recall that in a television interview on 7th January, on being asked whether the Government had any further plans for the privatisation of the Post Office, the Prime Minister said that the matter was under serious consideration and that it could well be included in the next manifesto? In all those circumstances, is the noble and learned Lord surprised that the Financial Times, a much respected and objective newspaper, wrote in a leading article that the Government's treatment of the Post Office was a textbook case of how not to manage a public enterprise?

§ Lord Fraser of Carmyllie
My Lords, I have indeed recently looked at the Statement to which I referred in my Answer. I am sure that the noble Lord will recollect that in making that Statement the Deputy Prime Minister, with the caution that is his hallmark, began the paragraph on external financing limits by saying: Although no responsible Government could undertake to ring-fence the Post Office entirely from the pressures on public spending, I am prepared to agree that in future we shall aim to set the EFL at about half the Post Office's forecast post-tax profit".— [Official Report, Commons, 11/5/95; co1.885.] In the circumstances of a very difficult public expenditure round, that external financing limit was indeed raised to something like £298 million to be paid over. That is a significant sum. However, those who object to that sum being required of the Post Office should indicate where they would find that money for public expenditure generally. Would they increase taxes or make further cuts in public expenditure?
1036 I am impressed that the noble Lord should rise so early on a Sunday morning to listen to the Prime Minister. What he actually said was that further consideration would be given to privatisation proposals in preparing the election manifesto. He was as worth listening to on that occasion as he was yesterday afternoon.

Lord Bruce of Donington
My Lords, is the Minister aware of the remarks that fell from the lips from the Deputy Prime Minister yesterday when he advocated that civil servants should be instructed in the use of graphical representation? If so, has the Minister taken it on board, because if a graphical representation was made of the number of people in the United Kingdom who are in favour of the privatisation of the Post Office, the depiction of those in favour would almost disappear off the graph paper by becoming a negative?

§ Lord Fraser of Carmyllie
My Lords, I think that it was an appreciation of public reaction that led to the Statement of 11th May. The Prime Minister has said no more than this—that further consideration will be given to privatisation proposals. I think that we should put the performance of the Post Office into context. We have now enjoyed the longest period of stability in stamp prices since the 1960s. There are fewer restrictions on capital expenditure. A new corporate planning process is under way and, as the chief executive of the Post Office has indicated, he now wishes to expand into Europe. That hardly seems to be a public corporation that is kept in fetters.

§ Lord Molloy
My Lords, if any fundamental change is to be made to the Post Office, will the Government consider seeking the views, and providing opportunities for the views to be expressed, of the trades unions, the employers' organisations and the very many other organisations that are interested in the Post Office and its future?

§ Lord Fraser of Carmyllie
My Lords, the noble Lord will appreciate that there have been a number of documents, not least the consultative document on the future of the postal service which was issued in June 1994. Therefore, there has been consultation when such matters have been considered. I emphasise what the Prime Minister said when he made that statement on television. He said that it was a matter that would be under consideration when the manifesto was drafted. I should have thought that that would reveal clearly that there was no intention of bringing about, or attempting to bring about, any privatisation of the Post Office this side of a general election

§ Lord Peston
My Lords, I congratulate the Minister on finding a way of getting the future of selective education into a Question on the Post Office. As I prepare for the next debate, may I ask the noble and learned Lord whether I should make some remarks on that subject ahead of him on the question of selective education in South America? Is that something that we should be doing all the time?
1037 On the Post Office itself, which is what I thought that this Question was about, did I understand his answer correctly—it seemed clear—that he regards the Post Office as doing extremely well because it is meeting its financial targets and is subject to enormous competition in the communications field? As is the case with the Stationery Office, would it not therefore be sensible to leave it to get on with things rather than going in for further barmy ideas about putting it into the private sector?

§ Lord Fraser of Carmyllie
My Lords, the noble Lord raises an interesting proposal. I had not intended to mention selective education in a debate on South America, but if the noble Lord feels that I could usefully spend my time dealing with that matter in the next debate, I am happy to do so because there are some interesting points to be made.
I return to the fact that we believe that the Post Office is now doing well. It now enjoys greater freedom than previously. It has been successful and has made profits. I believe that it is developing well to the benefit of the consumer. Something like 92 per cent. of all first-class mail is delivered the next day and 98 per cent. of second-class mail is delivered within three days. That is a real success.