The Post Office: Future (Hansard, 5 March 1997)

§ The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)
My Lords, the Government have no such plans. However, the 1839 Prime Minister has said that further consideration would be given to the future structure of the Post Office in preparing the election manifesto.

§ Lord Ezra
My Lords, does the Minister recall that on 11th May 1995 a new regime was meant to have been introduced for the Post Office, announced by the then President of the Board of Trade, which stated that in future the Government aimed to set the EFL, which means the dividend, at no more than 50 per cent. of the post-tax profit of the Post Office? Is he aware that since then the EFL has been set at 75 per cent., and that in some previous years at more than 90 per cent. of its post-tax profit, thus preventing the Post Office from reinvesting adequately and leading in one case to putting up the cost of postage stamps?
Secondly, in the Green Paper of 1994 two options were proposed; one for privatisation and one for giving the Post Office under public ownership greater commercial freedom. The latter proposal was then rejected but plans for privatisation failed. Are the Government looking once again at the possibility of giving the Post Office greater commercial freedom under public ownership which has successfully been carried out in a number of other countries?

§ Lord Fraser of Carmyllie
My Lords, while that is correct, it has not been possible to make progress with the external financing limits for the Post Office that we would have wished, as indicated in May 1995. We have abolished some restrictions on capital expenditure, a new corporate planning process is in place and we remain open to proposals for new business within the agreed guidelines. We have also been able to give the Post Office significant new end-of-year flexibility on its finances. However, as regards our future intentions, I repeat that the noble Lord must await the manifesto.

§ Lord Haskel
My Lords, is the Minister aware that the external finance limit, which is paid by the Post Office, is arbitrarily fixed at short notice according to the Treasury's needs? Does he agree that that is a totally unsuitable way for a business to work? Will he join me in welcoming Labour's undertaking to agree that the negative EFL will be fixed for a number of years so that the Post Office can operate in a much more businesslike way?

§ Lord Fraser of Carmyllie
My Lords, no public body can be immune from pressures on public finances. The noble Lord tells me that the Labour Party has made such a proposal and I should welcome the opportunity to hear him elaborate on it. As he appreciates, the EFL is a procedure by which the Post Office makes a contribution to public expenditure. If the noble Lord is now signalling that there is to be a decrease in what will go to the Treasury, it would be extremely helpful if he would spell it out.

§ Lord Clark of Kempston
My Lords, does the Minister agree that the Labour Party has always opposed any privatisation measure taken by this Government? Does he also agree that whereas when the now 1840 privatised industries were nationalised they cost the British taxpayers some £50 million per week, now the Exchequer receives £60 million a week, which is a turnround of £110 million?

§ Lord Fraser of Carmyllie
My Lords, my noble friend is correct in saying that there has been a dramatic turnround in the performance of the industries which were previously nationalised. I do not believe that there has been a single privatisation which at the time of introduction was not characterised by the party opposite as being a privatisation too far. Yet, not a single one of those privatisations is proposed to be reversed.
I agree with my noble friend that there are a number of other areas at which we might look for privatisation; but I repeat that, as regards the Post Office, he must await the election manifesto. As I answer the question, the name of the Secretary of State for Health seems to come into my mind.

§ Lord Jenkins of Putney
My Lords, is the Minister aware that not all privatisations have been successful and that there are considerable complaints that in some cases the services have declined? Is he further aware that I believe that the Post Office service is extremely good and I should be glad for it to remain in public hands? I believe that that sentiment is widely supported.

§ Lord Fraser of Carmyllie
My Lords, the experience in this country and in other countries which have followed us down the privatisation route has been that where industries have been nationalised their performance has been much better. Not only have services improved but, as my noble friend pointed out, far from being a drain on the public purse once they have been privatised, significant revenues have been paid over to the Exchequer. It is interesting to note that the recent so-called Green Paper on the Post Office, published by the CWU, recognised that if it is to succeed, a greater commercial freedom is necessary.

§ Lord Ezra
My Lords, following the question asked by the noble Lord, Lord Clark, is it not a fact that the Government's plans to privatise the Post Office, in particular the Royal Mail, failed because of opposition within the Conservative Party? It was not entirely to do with the Opposition at that stage. In those circumstances, and given the fact that the Minister has referred to the need for greater commercial freedom, will the Government now seriously consider the other alternative put forward in the Green Paper?

§ Lord Fraser of Carmyllie
My Lords, the noble Lord is correct in saying that there was not a sufficient majority to support the original proposal. However, the alternatives which might exist for the Post Office in the future will no doubt be eagerly read by the noble Lord in the manifesto once it is published.

§ Lord Haskel
My Lords, will the Minister remind his noble friend Lord Clark that reading out one side of a set of figures leads to bankruptcy? The figures which the noble Lord mentioned did not include the subsidies 1841 which are paid and the loss of assets to the public sector. It is all very well to comment on one side of the accounts, but one must also take into consideration the other side.
Is the Minister aware that 90 per cent. of the Post Office turnover comes from business mail? Most of it is generated on the computer screen. The Post Office is allowed to receive that mail electronically and distribute it the following morning on paper. In fact, it is one of the Post Office's major growth areas. However, it is unclear whether the Post Office is allowed to deliver that material electronically. When will the Government clear up that matter so that the Post Office can get into the electronic mail business?

§ Lord Fraser of Carmyllie
My Lords, as I indicated in my earlier answer to the noble Lord, we recognise that changes are taking place in the delivery of mail and in other electronic forms. We remain open to proposals for new business. However, as I have said on more than one occasion, I am not prepared to indicate what new proposals we might bring forward. The noble Lord, like others, must wait for the manifesto.

§ Lord Monkswell
My Lords, will the Minister advise the House of the connection between the Secretary of State for the Department of Health and the Post Office?

§ Lord Fraser of Carmyllie
My Lords, I sought to indicate that during the past weekend my right honourable friend the Secretary of State for Health was criticised for going into areas which were considered by some not to be part of his ministerial responsibilities. I wished to indicate only that I would in no sense be tempted to cover matters which were not within my responsibility.