Sitting of 10 November 1972

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORDERS OF THE DAY

  POST OFFICE (BORROWING) BILL
  Order for Second Reading read.
  11.4 a.m.
  The Minister of Posts and Telecommunications (Sir John Eden): I beg to move, That the Bill be now read a Second time.
  It is needed now because the investment plans of the Post Office will cause its requirements for loan capital to exceed its present permitted limits early in the New Year. The opportunity is also being taken to ask Parliament to authorise me to release the Post Office of debt attributable to accumulated losses of the postal and remittance service. During the course of my speech this morning I shall endeavour, I hope without undue length, to put before the House a full explanation as to why these extra borrowing powers are required and why the proposed write-off is justified.
  Hon. Members will, I am sure, understand that I cannot in my opening speech cover every aspect of the Post Office's activities. Later today, Mr. Speaker, I shall be seeking the leave of the House to reply to the debate and I will then, of course, do my best to answer the points that will have been raised. Nor will the House expect me to go over all the past history. But it is important to recall that when in 1961 the finances of the Post Office were separated from those of the Government, its debt to the Exchequer amounted to £792 million. Since then its business has been expanding very rapidly and this has caused the capital base to grow as well.
  In 1969 the Post Office was made into a public authority and its debts had grown by then to £1,680 million. The Post
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  Office Act, 1969 set a limit for borrowings by the new corporation of £2,300 million with provision to raise this by order by a further £500 million. An order to this effect was approved by the House in April, 1971. When the 1969 Act was passed it had been thought that these borrowng powers should be sufficient for about four years. But by the beginning of the current financial year actual borrowings had reached £2,477 million and further borrowings to the end of March, 1973 are forecast to exceed £400 million.
  So the borrowing limits need to be raised again by an amount sufficient to enable a substantial new investment programme to get under way, whilst retaining a proper degree of parliamentary control. The Post Office's capital expenditure programme has been expanding steadily over the last few years and is now extremely large. The bulk of the new investment is, not surprisingly, being taken by the telecommunications business. It is highly capital-intensive and in need of new equipment on a massive scale. This is not to imply that the postal business should be seen as a "poor relation"—far from it. Efficient postal services are a vital link in our national communications chain, but they are much more labour intensive than the telecommunications business.
  Even so, over the next four years some £190 million will be required on the postal side to maintain existing services, to increase efficiency and to reduce costs. About 70 per cent. of it will be spent on modernising or replacing buildings and most of the remainder will be devoted to a progressive mechanisation of work in large sorting offices. The Post Office plans increasingly to concentrate the sorting of letters and parcels on to a limited number of handling centres with automatic or mechanised sorting equipment in order to reduce the heavy dependence of the business on manpower.
  Research and development work will continue on still more advanced systems, including the possible use of optical character recognition techniques for the automatic sorting of certain types of post-coded mail. It speaks highly of the attitude of the trade union towards these developments that it not only welcomes them but is actively encouraging them.

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  Money will also be needed to replace old vehicles and to expand the mail van fleet.
  But it is the modernisation and expansion of the telecommunications business that will require very much the greater part of the total capital expenditure. It is a big and ambitious programme. The projected growth in demand looks startling. It is expected that in the next five-years industry and commerce will require more than 500,000 new exchange lines, while residential subscribers will have risen by some 5 million. By then it seems most probable that the telephone will have become an essential and a natural part of the equipment in more than two-thirds of the households in the United Kingdom.
  There is no reason to doubt these forecasts and their significance cannot be overlooked. They mean that the size of the system will have doubled in ten years, rising to 16·5 million exchange connections in 1978. Similarly rapid expansion is also expected in the demand for telex services, in data transmission and in private circuits. People are also likely to be making much more use of their telephones and the number of telephone calls is expected to grow from 12,000 million last year to an estimated 23,000 million in 1977–78. They will have nearly trebled in ten years. More information about the scale of this growth in demand is to be found in the booklet that the Post Office has most helpfully prepared.
  I am sure that all hon. Members have appreciated the careful way in which the Post Office has set out its plans, and also for the trouble it has taken to organise the exhibition upstairs so that we can see for ourselves examples of some of the equipment involved. Mr. Speaker, I know what great pleasure your visit to that exhibition gave to those officers of the Post Office who have been manning it.
  Whilst expenditure in the current financial year is expected to be about £700 million, the Post Office booklet shows that over the five years from March, 1973, more than £4,000 million on further investment will be needed. As in the past, the Post Office is hoping to raise something approaching half this from internally generated funds, that is, from profits and depreciation, and it would need to borrow the remainder from
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  the National Loans Fund. The precise amount from year to year will naturally depend on the degree of self-financing and, for example, on any fluctuation in the working capital.
  The net new borrowings by the Post Office have in recent years been on a rising scale and are expected in the current financial year to exceed £400 million. With the continuing growth in capital requirements foreseen, the net borrowings in the next four or five years are expected to lie between £400 million and £500 million a year.
  Provision has therefore been made in Clause 1(1) to increase the borrowing limit by £2,000 million. It is expected that this should be sufficient for this financial year and the next four years. The proposed increase in the borrowing powers is divided into two equal tranches. The further approval of the House will therefore need to be obtained before the second tranche can be granted.
  These are large sums. It is most important to ensure that they are wisely invested. The Post Office Board is responsible for seeing that individual projects are subject to a rigorous system of appraisal. It prepares annual investment programmes based on a five-year rolling review. I shall be responsible for approving the general lines of these programmes and the House will be informed.
  I shall be satisfying myself that modern techniques of appraisal continue to be applied and I will ensure that costed alternatives are fully considered before any major policy decision affecting investment is taken. I am glad to say that the Post Office has been developing corporate planning techniques which will extend the forward look to ten years and beyond, besides improving its capacity to evaluate and monitor progress against its planned objectives. The plans will come to my Department and will assist me in my consideration of the Board's programmes and in discussion with it about the direction of future policies and developments.
  As the House will know, it has been the practice of successive Governments to set any business in the public sector a financial target towards which it should aim and against which its performance would be judged. For the telecommunications business the current target is to

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  earn 10 per cent. on net assets; for the postal service this has been set as 2 per cent. on expenditure. But, obviously, recent policies of price restraint have had their effect, so that in 1971–72 the telecommunications business earned a return of 8·6 per cent., while the postal service incurred a loss of £12·6 million.
  We are now coming to the end of the five-year period for which the current objectives were originally set. Before March, 1973, therefore, they will be reviewed and the implications of the Government's new counter-inflationary measures, which have just been introduced, will be fully taken into account.
  The Post Office is big business—one of the biggest in the country. Its postal service, telecommunications business, giro and remittance services together employ some 400,000 people. Its operations affect everyone in the country and have a marked impact on our general economic performance. I therefore welcome the emphasis, so noticeable throughout the pages of its booklet, which the Post Office management is giving to securing value for money and inmproving the quality of service to its customers.
  We all know how frustrating it can be to have our telephone calls go wrong, or our letters arrive later than expected. We get many protests about the difficulty of making a call to Europe. We hear many complaints about the waiting time for a new telephone. To the individual concerned, the experience can be infuriating. To the Post Office the need to satisfy him at the earliest possible moment represents a challenge of massive dimensions.
  This year, about 1·5 million new customers are being connected to the telephone system—an increase of 35 per cent. over two years ago. Currently, about 80 per cent. of new orders are met within 40 days; more than one-third are completed within five days. But 20 per cent. of all applications still have to go on a waiting list with an average waiting time of five months and this list stands at around 220,000. No one is content that this should be so and urgent action is being taken to reduce the list.
  This is what is being done. The Government have already approved
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  increases in investment aimed at making further improvement in connections in the short and medium term. The Post Office is ordering additional equipment for immediate use and it has called in consultants to help it respond more quickly to changes in demand. It has also launched a series of bilateral talks with its principal suppliers in order to speed up the delivery of equipment and to work out a joint plan of action. I intend to support these steps by a series of meetings with the industry which I have initiated in conjunction with the Department of Trade and Industry, with the help of Mr. Robin Hutton, my special adviser. In this way, I shall be able to ensure that the resources of government are fully behind the Post Office, and its management can be assured of my active support for its substantial efforts to reduce the waiting-list.
  In the longer term the hope for major improvements lies in the modernisation of the telephone network. This will be a most important decision. Its total cost is likely to be several hundred million pounds, although only a relatively small amount would be incurred during the expected lifetime of the powers in the Bill. At present 90 per cent. of the system consists of the electro-mechanical switching equipment called Strowger, which was invented in the last century and examples of which have been on exhibition upstairs. It has given good service in the past, but it has many shortcomings compared with more modern equipment. Amongst other things, it is bulky, and expensive to maintain.
  The advanced telephone exchange equipment capable of meeting the needs of the system in 1980 and beyond, could not be developed for some time. Meanwhile the Post Office has been studying the need to introduce modern equipment at an earlier date. For some years, Crossbar, a later electro-mechanical development than Strowger, has been ordered for trunk and large local exchanges, while an electronic reed relay system has been ordered for small local exchanges.
  The choice in the immediate future for large local exchanges has yet to be made. In 1971 the Post Office entered into a development contract with one of its

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  suppliers to produce 16 electronically-controlled large local exchanges using reed relays. This is the exchange often referred to as TXE4.
  This work has been going well and at the end of this year the Board intends to review progress and assess results. After consulting industry the Post Office will decide whether or not it wishes to adopt these electronic exchanges for large-scale introduction into the telephone network. It will also consider the question of prematurely retiring the existing Strowger exchanges in order to replace them with the more modern equipment.
  Once the Post Office Board has reached its conclusions, it will be my task, as part of my statutory responsibility for approving its capital investment programme, to consider its proposals. I cannot obviously now say precisely when this is likely to be, but I should like to assure hon. Members—as was recently made clear to the Select Committee on Nationalised Industries—that as soon as the decision is reached steps will be taken promptly and fully to inform the House. The Government are, of course, very much aware that, whatever that decision may be, it will have implications for manufacturers' plans, for their export potential and for employment prospects. We are therefore already gearing ourselves to deal with it in all its aspects.
  In Clause 1(2) of the Bill I am seeking powers to enable me, with the consent of the Treasury, to release the Post Office from the liability to repay debt incurred in respect of losses of the postal and remittance services up to March, 1973, subject to an overriding maximum of £200 million.
  From April, 1961, when Post Office finances were first separated from those of the Exchequer, to March, 1973, the total cumulative deficit will be about £190 million. This figure includes some expenses which were incurred by the postal business in launching Giro before it opened and were written out against reserves in 1969. But the Giro trading losses do not come into it; they will stay on the books of the Giro business.
  In reaching my decision to propose the write-off to the House, I have taken into account a wide range of difficult problems that now faces the postal business
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  in its attempt to restore viability. With a staff of 174,000, nearly three-quarters of its costs are labour costs. It is therefore particularly vulnerable to wage inflation. Yet it cannot greatly reduce its dependence on manpower so long as the basic pattern of collections and deliveries is maintained, for these processes do not readily lend themselves to flow-line techniques or mechanisation.
  In addition, the long term growth in traffic—and hence revenue—had shown signs of weakening in the face of sharper competition from an expanding telephone service and changing social and commercial habits. In the aftermath of the 1971 postal strike mail business actually fell in 1971–72 by over 9 per cent. compared with the previous year. Housing developments and the dispersal of the population to outlying suburbs create some 300,000 new delivery points each year for which the equivalent of around 500 additional postmen are required with no corresponding increase in traffic or revenue. Like its European counterparts, the postal business will be an exempt value added tax trader and will thus have to absorb the tax on the goods and services supplied to it.
  In the face of the problems I have described vigorous efforts are already being made to contain costs and to improve reliability. Although there are enormous difficulties—and nobody should be under any illusion about that—many people have been working hard for some time to bring about improvements. A number of productivity improvement measures are being negotiated and an action programme to remedy weaknesses in the sorting and routing of letters has been started.
  The Government attach great importance to the successful fulfilment of these plans by the Post Office. But these measures cannot alone suffice to bring the postal service back to current surplus, nor can they make any substantial contribution to the reduction of past debt. For an industry which still gives a form of personal service to its customers and will inevitably remain less highly mechanised than most, the task of achieving viability will be challenging. Experience in many other countries confirms this. In any event, I do not accept that it would be right to charge present-day users of

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  the post higher prices than are needed to cover current costs in order to overhaul losses going back to 1962. Nor would it be right to introduce now the service cuts that the Post Office Users' National Council advised against as recently as January this year.
  The plain fact is that these losses are irrecoverable and no purpose would be served by carrying them forward indefinitely in the accounts of the postal business. Accordingly, in endorsing the Post Office proposals for the write-off, the Government are seeking not only to mitigate future tariff increases but also to give the postal business a fresh start at the beginning of a new quinquennium. I know that the many thousands of postmen and postwomen throughout the country are anxious to see the slate wiped clean. They will, I am sure, now wish to play their part in restoring viability.
  With the burden of past debt removed and a cumulative reduction in interest charges of some £100 million over the next five years, we shall be creating the right conditions for management and staff to co-operate in renewed efforts to improve productivity, to raise efficiency and to give their customers value for money. The write-off is intended as a spur to the Post Office to remedy existing deficiencies and to tackle the problems of the future with greater confidence.
  This Bill is simple and short. But it involves huge sums of money and promises massive development in our telecommunications and postal services. In commending it to the House, I am very much aware that behind all this expenditure are the several hundred thousand men and women employed by the Post Office. The worth of this investment, both to taxpayers and customers, depends upon the quality of their work and the service they give. We place an enormous trust in them. I am sure they will take pride in repaying it.
  11.28 a.m.
  Mr. Gregor Mackenzie: I find myself in a somewhat embarrassing position this morning. Last night I went through the Division Lobby with the right hon. Gentleman the Minister of Posts and Telecommunications, and did so with some enthusiasm since I was voting for the continuance of the sanctions against Rhodesia. This morning I
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  find myself having to suggest to my right hon. and hon. Friends that we should not divide the House on this Bill which the Minister has just presented to the House. This may seem to some of my hon. Friends to be the beginning of consensus politics in post and telecommunications. However, I must point out that last year we were able to show to the Minister and his colleagues that consensus certainly does not exist on the subject of commercial radio.
  We give the Bill the sort of welcome Oppositions always give such measures, by reminding the House that the money which is now to be sought for expansion and modernisation of the industry was initiated by some of my right hon. Friends only a few years ago. It is not unreasonable in giving a welcome to the Bill to say that the right hon. Gentleman is asking for a great deal of money and that it is his bounden duty to explain in detail how the money should be spent and to reveal something of his own philosophy. We look forward to hearing his more detailed views during our Committee deliberations. Obviously we shall wish to raise a number of topics, and we shall expect to receive assurances about them.
  In 2½ years this is the first time that we have had an opportunity to discuss the affairs of the Post Office in a full day's debate. It is traditional with some of the nationalised industries that we discuss their affairs only on Select Committee Reports or on Borrowing Powers Bills. This may have been in the mind of Mr. Herbert Morrison many years ago when he thought up these procedures. I am not certain that that is the right way to handle these matters in the 1970s. The Post Office is a subject which always interest hon. Members. It also has a great deal of interest for our constituents. I hope that we shall be able to find a formula whereby it will be possibe for the House to debate the annual reports and accounts of the Post Office Board.
  I come afresh to the subject of posts and telecommunications, as the Minister does, and the first matter which strikes me about the Post Office is the tremendous loyalty of those who work in it. After all, the Post Office is the biggest employer of labour in the country. If my advice is correct, it is one of the 10 biggest employers of labour in the world. I have

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  found that everyone in the Post Office, from the top to the bottom, is truly dedicated to his job. There have always been Post Office families, people who have long traditions of service in the public interest. Over the past two or three years in looking at these matters we have all been impressed by the tremendous loyalty that exists. I have in mind postmen in rural areas who do work which is far beyond the normal call of duty. It is almost social work of a kind. I have in mind, too, those Post Office engineers who have been so helpful in installing telephones for the disabled and the elderly. Those are two examples which come readily to mind of the loyalty of those who work for the Post Office.
  I am sure that we all feel that it is a loyalty that we have to reciprocate. We owe it to those men and women who work in the Post Office to tell them the precise plans of the Post Office. They are entitled to be assured that those plans will improve their position in the future. I propose to say something more about that later, but I want to come now to the financial considerations which surround the Bill.
  We are discussing the Bill under the shadow of the Counter-Inflationary (Temporary Provisions) Bill. It has a very long name. I am told by my wittier friends that it is a description of "At a stroke for 1972". Be that as it may, we are all conscious of the fact that the Bill that we are considering this morning was drafted and that the plans which brought it forth were all in being prior to the Counter-Inflationary (Temporary Provisions) Bill. As a consequence there are a number of questions which come to one's mind when one takes the two together.
  We see Post Office finances being affected in two specific ways. The first is that during the course of the CBI's voluntary 5 per cent. initiative, the Post Office restricted increases in its prices in global terms to about 3½ per cent. I have no doubt that the Minister will argue that the losses that it has incurred by keeping to this initiative will come within the £200 million which he is now permitting it to write off. But will there be any spill-over into the next quinquennium from that? The second point relates not to the telecommunications
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  side, where the margin of profitability obviously must be reduced, but to the postal side where the investment programme may be affected.
  The next matter concerns the freeze itself. It is intended to last for something in the region of 150 days. If experience is anything to go by, it could continue even longer. I do not want to be a pessimist about it, but that is always a possibility. In the event of that happening, how does the Minister see the financial prospects of the Post Office? The Chairman of the Post Office has said already that the projected expansion in the modernisation programme is linked with the price increases that he envisages for the earlier part of next year.
  Then, in the event of any interest charge increase, is account taken of it in the Bill? This matter was raised by a number of hon. Gentlemen opposite only the other day. Although it might be regarded as a hypothetical question it is one that we ought to consider.
  The other financial question concerns the value added tax. Earlier this year we discussed the effect of VAT on the Post Office, especially on its telecommunications business. It is also a factor affecting the postal business. I am not yet satisfied about the figures which were presented at that time. We all know the effect that it will have on the consumer. If there were to be a diminution in mechanisation or in the improvement of telecommunications, it would be a cause for considerable concern.
  That brings me naturally to the targeting referred to by the Minister this morning. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) raised it with the Minister on Wednesday of this week and he was told that it would be settled in the spring. I hope that the Minister will be in a position during the course of the Committee Stage to say whether he sees the current targets of 10 per cent. and 2 per cent. being the right ones in view of the very substantial borrowing that is envisaged, and whether he believes that the present targets which would keep the degree of self-financing to somewhere in the region of 50 per cent. are the right ones.
  I cannot pretend to be an expert on these financial matters of targeting and so on, but I have niggling doubts about

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  them, as I am sure some of my hon. Friends have. I recall that earlier in the year there were exchanges between the Minister and some of his hon. Friends on the targets and the degree of self-financing. It would be useful if the Minister could clarify these matters before we come to the Committee stage.
  I want now to say a word or two about the work of the postal side of the business. Sometimes I feel that it is the poor stepbairn of the Post Office. Indeed, the Minister hinted at it this morning. We in this House do not spend enough time considering the postal side of the business. We only hear about it when people complain of late deliveries, and so on. We seldom hear anything of the more positive work which the Post Office is doing.
  I do not want to sound complacent—after all, it is not for me as the Opposition spokesman to make comments on this matter; it is the Minister's task—but, from what I have seen abroad, the Post Office and those who work for it have nothing of which to be ashamed. In fact, quite the contrary. The postal service is something of which we may be justly proud.
  We have all been spending a great deal of time thinking about tele-communications and telephones. It may be a long time before everybody has a telephone and it may be quite some time before everyone who wants one can get one. Therefore, I wonder whether the amount that we are setting aside for modernisation and mechanisation on the postal side is enough. The Minister said he thought it was high. Frankly, I have some doubts. The figure goes up from roughly £30 million per year over the last period to about £50 million per year over the next. If one says it quickly, it sounds a great deal of money; but, frankly, I am not as enthusiastic as the Minister about it.
  I have looked at two aspects of this matter. First, the buildings themselves and, secondly, the kind of machinery we require for sorting, and so on, on the postal side. I do not know the experience of hon. Members, but many Post Office buildings which I have visited look like monuments to Queen Victoria. I should think that the task of putting modern machinery into those old buildings would be a planner's nightmare.
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  Some very good new buildings are going up, but clearly there must be a greater degree of Post Office building than in the past. This applies particularly in our major city centres where a great deal of redevelopment is going on. In this respect, one also thinks in terms of Post Offices in redevelopment areas, new towns, housing schemes, and so on.
  We all want to see modernisation. We all believe that there are new technologies. In Committee we shall want to hear the Minister's views on this programme of modernisation. Unless people are convinced that a better programme of modernisation and mechanisation is being brought in, the postal codes, which sometimes come in for criticism by hon. Members on both sides, will not fall into disuse, but will be less enthusiastically received by the general public.
  One criticism is that the postal codes are a bit too complicated. That was my original view. I am now beginning to change it. If people feel that the mechanisation is there, they will use postal codes more frequently than they do now. As an aside, the Minister might suggest that the Post Office, too, should use postal codes. Looking at my telephone bill for the London area of only a few weeks ago, I discovered that the Post Office had not used the postal code. Of course, this was London not Scotland. In Scotland I get the postal code on my telephone bill. Only yesterday I received from the Post Office a new dialling code handbook. Again, it is addressed to me at my flat in London with no postal code. If the Post Office wants to make anything of these codes, it would be helpful if it showed some enthusiasm for its own baby.
  The postal side of the Post Office does a very useful job on marketing. This has always been enthusiastically received by the trade union leaders to whom I have spoken. The Post Office has to sell a service, and I certainly wish it well in its endeavours, but one point about which I worry on the postal side—the Minister mentioned it in passing this morning—is the social obligation of the Post Office and the financial burden that is placed on this nationalised industry.
  Many Post Offices have to deal with pensions, and so on. There are constant complaints about telephone kiosks, vandalism, and postal deliveries in rural

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  areas and some of the new housing schemes. This is an extremely costly exercise for the Post Office. I know the traditional view of the trade unions associated with the Post Office. I am not suggesting that there should be an overall subsidy, but I strongly believe that some measurement should be made of these social factors which should be taken into account in the financing of current and future projects. The Minister said that, after all, this is a highly labour-intensive business, very sensitive to inflationary trends. Therefore, some help to the Post Office in carrying out some of these very useful social functions would be worthwhile.
  When talking about the finances of the postal service, the Minister said that it was a challenge to postal services not only of this country but throughout the world, because all of them found it difficult to operate at a profit. Therefore, anything which could be done by the Post Office to help to get over the problem would be of considerable value.
  To say that I am slightly critical of the amount set out in the brochure on posts, as I did earlier—I do not say this for the benefit only of my hon. Friend the Member for Newcastle-under-Lyme who has strong views on this subject—does not mean that I want to take money out of the telecommunications investment programme and put it into the posts side of the business. I think that both stand on their own in this way.
  Having read the useful document prepared by the Post Office, I welcome the substantial new developments in telecommunications and congratulate the people involved in the research programmes. Sometimes I get a little confused by all the new technologies and the expressions I hear—confravision, stored programme control, cable television, and other things. Not many of the letters I receive from my constituents are concerned with confravisions or facsimile reproductions; they are usually about getting telephones rather faster than at present.
  Mr. Sydney Bidwell: Calls to Europe, to which the Minister referred in his opening, are not the kind of inquiries we get. They are more likely to be about where to obtain a stamp.
  Mr. Mackenzie: I do not make many calls to Europe. People needing telephones call on their Members of Parliament to help them. I think the Post Office is conscious of this problem. I appreciate the improvement that has been made and welcome any Ministerial assurance about help, but there is still a big waiting-list.
  I have been critical during the time that I have been acting as the Opposition spokesman on this matter. The Minister's predecessor was given to slick answers on this problem. The right hon. Gentleman used to say that this was the fault of the Labour Government and that if they had invested more we could have installed all the telephones we needed. This was far too simple a reply. If my arithmetic is right, the Post Office has been starved of money for a much longer time by the Conservative Government that it was by any Labour Government. Between 1964 and 1970, Labour Governments substantially increased the amount of money spent on telecommunications. Perhaps I may remind the Minister that since 1935 he and his colleagues have been in power for 24 years, while we have been in power for only 11. Thus, if the Post Office has been starved of finances to enable it to develop its services, blame can be apportioned on that arithmetical basis.
  Mr. Frank Marsden: Would not my hon. Friend concede that, generally speaking, over the years the Post Office has been shabbily treated—not only before the war, but since?
  Mr. Mackenzie: That is the point I was making. I was saying that up to 1964 the Post Office had been starved of the necessary money to develop its telephone service, and we are now waiting for a proper answer. I do not think that the answer about everything being the fault of the previous Labour Government is good enough. To adapt a Post Office expression, "Someone, somewhere is waiting for an answer", and we would like the answer to be given in committee.
  Sir J. Eden: By first or second-class mail.
  Mr. Mackenzie: Yes, or perhaps we could be given it on the telephone. That would be even better.

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  There has been a good deal of criticism from this side of the House about the role of the suppliers of Post Office equipment and whether they are measuring up to the task of helping the Post Office to get over its difficulties. Not many months ago a substantial contract for equipment went to Sweden. We did not oppose that at the time because we took the view that, although we could do with the work in our development areas, the Post Office was entitled to get the kind of equipment that it wanted at the right price and within the right delivery dates. But it is a reflection—I say no more than that—on the suppliers in this country if we have to go overseas to get the right type of equipment at the right price. I do not think that any Labour spokesman could leave the matter there. There is provision within the Post Office Act for the Post Office to do its own manufacturing, and I think that that is something to which the Minister should give some attention.
  Mr. Peter Rost: Would not the hon. Gentleman concede that before being too critical of the manufacturers of telephone equipment one should realise that they export a great deal of their output, which more than proves that they are competitive in world markets?
  Mr. Mackenzie: I have never thought that manufacturers of this country had an export record that was all that wonderful. Deliveries by them to the Post Office have not been up to standard, and most of us are encouraged by the enthusiasm of people in the Post Office who are seized of this problem and are resolved to deal with it.
  I do not want to enter into a learned discussion on the merits of TXE2, especially as we have not had a decision from the Post Office Board about it, nor have the information to back it up. On balance, and because of the advice that I have received from people concerned with these matters, I favour TXE4. But this is a matter which we shall want to discuss at some length once we have had a decision from the Post Office on precisely how it intends to go about dealing with it. I do not want to press the Minister too hard now, because I feel very strongly that whatever decision we take it must be the right one, and we
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  must give the matter a great deal of thought.
  I said earlier that I was concerned about the effect of VAT on the telecommunications service. The Post Office is having difficulty in persuading people to use their telephones more frequently, and the efforts to get them to do that to the extent that one finds in European countries is not helped by the impending imposition of VAT. In fact, it is a positive disincentive to such use, and the Minister ought to consider that in the months ahead.
  I said earlier that those who worked for the Post Office are entitled, because of the contribution that they have made to the growth of communications, research, and so on, to some kind of assurance. The assurance they want is that the programme which the Minister has put before us this morning will remain intact despite any pressures that may be exerted on him by his colleagues. I know that there is pressure when things become difficult—and things are difficult now—to reduce a proposed programme, but I hope that the Minister will keep his programme intact and that the full amount envisaged in the booklet will be spent in the way that is proposed. Those who work for the Post Office and are users of its services are entitled to that assurance.
  I see that the hon. Member for Derbyshire, South-East (Mr. Rost) is present. I suppose he has come to make his speech about Giro. I am sorry about that, but that is what it looks like to me. The Minister will perhaps be pleased to hear that we have always welcomed his decision to continue Giro. We have always felt that it is a useful way of transacting business. We do not ignore the fact that there are several problems associated with starting a business of this kind, but I am not certain that the Minister's Department has managed to get the simplicity of the system across to the general public. I am not certain, either, that it has managed to get the benefits of the system across to local authorities who could use it for, say, rent collection. It would be better if rent were collected through this system rather than by using the traditional methods.
  I am sorry, too, that the Post Office has not managed to get the advantages of Giro across to Government Departments.

  1391
  It may be that the people who run those Departments do not like to change their ways, but perhaps the Minister might like to do an exercise in each Government Department in order to put over the implications and the social benefits of using Giro. No doubt competition has its place in the Minister's mind, but he, more than anyone else, must be aware that Giro is now his responsibility, and we hope that the system will be used to the full.
  Many of the points that I have made will no doubt be dealt with in greater detail by my hon. Friends today, particularly by my hon. Friend the Member for Manchester, Openshaw (Mr. Charles R. Morris), and again in Committee. There is one point that I wish to emphasise in conclusion. So far my comments have, I hope, been all sweetness and light, and I hope that I have not struck any jarring notes.
  The Post Office is a public service. It operates with public money, and the Opposition's view is that that should continue. I am sorry that the hon. Member concerned is not present, but a few years ago he used to tell us from this Dispatch Box what he thought about the telecommunications side of the business, about hiving off and about private money going into the system. The same theme was taken up at the first Conservative Party Conference after the Government's success in the 1970 election.
  More recently, in fact on 16th July, Mr. James Margach, in the Sunday Times., said that the Government are to consider inviting private investors to take a share in the next stage of their programme for extending the telephone services. We hope that the Minister will have none of this. If he does, the peace of these deliberations will be shattered. The debate on such a proposition would be even more acrimonious and probably last even longer than the debate on commercial radio. The effect on staff morale would hardly bear thinking about. The way that we have done it in the past should continue in future. I hope that the Minister will give such an assurance.
  I have always been a Post Office enthusiast, perhaps because it is one of the first of the public services and can be used as a good model for public enterprise. If perhaps today some of my
  1392
  remarks have been a little critical, I assure the Minister and those in the Post Office that they have been well-meant criticisms and I hope that they will be received in the same spirit.
  We welcome the Bill. We wish well to those in the Post Office who face a tremendous task of development. It is a great challenge to them. Knowing the men and women of the Post Office as we do, I am sure that they will be ready and willing to meet it.
  12.2 p.m.
  Sir Henry d'Avigdor-Goldsmid: The atmosphere of these debates is agreeably uncontentious, and I hope that I shall do nothing to disturb the vicarage tea party feeling. But, as one who was Chairman of the Select Committee on Nationalised Industries in the last Parliament, I believe that some comments are due on this very small Bill, which has only one effective clause but will put the sum of £2,200 million extra of public money at the disposal of the Post Office.
  It is clear that Friday morning is a nice way for the Government to get it through, but the hon. Member for Rutherglen (Mr. Gregor Mackenzie), who spoke very well, grumbled that we had few opportunities for discussing these matters. I cannot see why we should not discuss the Annual Report and Accounts of the Post Office. That is an excellent topic for a Supply Day. There are other excellent topics for Supply Days which are chosen in advance and are usually uncontroversial.
  These proposals include the expenditure of £1,300 million on a new exchange system. I do not want to go into the merits of one system or another, but the Minister has promised that the House will be informed as soon as the decision is made. Most hon. Members would probably agree that this subject should be discussed before the decision is taken. We should have a White Paper on this, which would allow perhaps a half-day's discussion. Perhaps the House would have nothing of value to add to the conclusions of the Post Office, but in any case the idea that an expenditure so vast should be undertaken and then reported is unacceptable. There are implications of this expenditure in all fields of Government and industrial activity.

  1393
  My plea to the Minister is that, instead of just advising us that we will be told when the decision is taken, we should have a White Paper giving the Government's reasons for the decision, and have a chance to discuss it. The House may be so satisfied with the reasons for the impending decision that it will not want to discuss it—I cannot forecast how people will behave—but there should anyway be a nominal opportunity for the House to make up its mind.
  I can claim a long experience of the Post Office. Apart from the Select Committee on which I sat when we first reported on the Post Office in the 1964–65 Session, I also sat on the Committee on the Post Office Bill. So I have lived with these things for a number of years. One cannot but be impressed by the quality of the thought which has gone into this little handbook, "The Post Office Investment for the Future", which is very clear. One should congratulate the Chairman of the Post Office Board and his colleagues on such a rendering.
  However, the Post Office Report and Accounts for 1971–72 do not come amiss. Both the telecommunications side and the postal side are in one account, as it were. We are not so much harnessing Pegasus to the plough as trying to drive in double harness a racehorse and a moke. They should be separate. From the accounts one sees that, telecommunications, which is a growth service, made a profit in the last year of £58 millon, while the posts, for obvious reasons, made a loss of £12,800,000. So there is a subsidy from telecommunications to postal services all the time.
  That is only natural. We should not be smug about our telephone "penetration". Ours is a very low penetration for a western country. In the USA there is a penetration of over 80 per cent., and that includes vast numbers of rural areas, where the differences of space are very much the same as we have here.
  When we discussed this in the Select Committee the hon. Member for Poplar (Mr. Mikardo) asked what would happen if his constituents regarded the telephone with the same eyes as they regarded the private car. Obviously, that kind of demand from the inhabitants of Poplar would put an unbearable strain on the
  1394
  engineering division of the Post Office as it was then constituted.
  We have to watch this question of stimulating demand, and ensure that we can meet it. My constituency is in the West Midlands, where we have a very difficult time with waiting lists. It is very disheartening for a Member of Parliament to write to a constituent that, using its best offices, the Post Office hopes to be able to give him a service within the next 18 months. This is the sort of thing that one has to say.
  I do not say that the Post Office does not do its very best to meet the demand, but there is always the question of shortage of exchange equipment. This goes back some way to the TXE4 decision. This is something that we shall all have to live with. I suspect that the decision to abolish Strowger and take on the TXE4 will increase waiting lists even more in the short run, and this gives me no confidence at all. We have to think in terms not of the ideal but of the possible; the two are very different.
  Exactly the same thing applies to the postal services, which are labour-intensive. It is absurd to think that in 1972 we could possibly get a service of the same quality as we got in 1872. One hundred years ago postal deliveries were very frequent. I think that now we would all be satisfied if we had one postal delivery a day, and early. But, also, we have to give credit to the Post Office for the very difficult hours the postman has to work to provide us with our letters at breakfast time. This is a very important angle. It is idle to think that we shall find it easier to provide letters at breakfast time. It will be increasingly difficult. We should not go into any hypocrisy on this subject. We ought to realise that in terms of the age we are now living in we have a service depending entirely on the human element. We have to make the proper concessions to the man who brings the letters. He should be treated with respect and provided with transport. At the same time, he should not be asked to arrive at work at 3 a.m. and hang about all day after he has made his first delivery.
  These may be only details, but the Post Office has to remember that the House of Commons, although it is very gullible, is still not totally unaware of what goes

  1395
  on in the world. Improvements in the postal service are unlikely.
  Returning to the Post Office's report, the hon. Member for Rutherglen spoke about the Giro. I do not share his optimism for the Giro. A large amount of the initial expenditure on that has been written off, quite properly; but even last year the Giro managed to lose £8 million. The Giro draws its income from the amount of money that private individuals are prepared to leave in their Giro accounts. If the local authorities and Government Departments which the hon. Gentleman mentioned pay money into the Giro, they will do it for distribution to the various recipients. It is only when recipients leave money in their Giro accounts that the Giro will benefit. If we are to continue with this large annual expenditure on Giro we should provide some attraction to private individuals to leave their money in their Giro accounts. Perhaps it is a matter of convenience for local authorities and Government Departments to use Giro as a means of paying their indebtedness, but the system will only be at a loss on this business if the recipients draw out the money immediately.
  During the passage of the Post Office Act we had long debates on this subject and some of the claims for Giro were then rather overstated. I still think that the Giro is now in a very competitive business. We have to be clear in seeing that it is competing with the banks and savings banks. We should not be so concerned about attracting the big companies and authorities to use it as a means of payment, but should make a definite appeal to the recipient to leave his money in his account. That is not controversial, but it seems to have escaped the notice of those who are in charge of Giro activities.
  Mr. Gregor Mackenzie: My main point was that Government interest and local authority interest serves as a very good base. I appreciate the other points made by the hon. Gentleman.
  Sir H. d'Avigdor-Goldsmid: I do not want to take up the time of the House. My particular point is that the Select Committee on Nationalised Industries cannot, in the nature of things, exercise that sort of supervision over the Post
  1396
  Office that perhaps some hon. Members expect it to do. It can only turn its attention to the Post Office once every few years or so, perhaps once every seven or eight years. Therefore, it is up to hon. Members who are interested in the Post Office to bring it to the attention of what we call the "usual channels" so that we have an annual discussion on the report and accounts of the Post Office. It is a vital service. It affects all our constituents. If we bring it to the House we ought to be able to have a proper discussion, not just the exchange of honeyed words such as we have had this morning but perhaps with a slightly controversial note, and, perhaps, a debate at a more fashionable time.
  12.16 p.m.
  Mr. Harry Ewing: In following the speech of the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) I do not promise to continue the non-controversial note with which the debate seems to have begun, nor do I promise to utter many honeyed words.
  I was interested in the hon. Gentleman's observations about one postal delivery per day. He will not mind my saying that in Post Office circles that suggestion would meet with substantial opposition. I was equally interested in his comment that the postal side and the telecommunications side ought to be separated. Here again, that would meet with substantial opposition.
  I shall not say too much about Giro, but in the 14 months that I have had the honour and privilege of being a Member of the House not one Question Time to the Minister of Post and Telecommunications has passed without an attack from the Government side of the House on the Giro services.
  In its initial stages, Giro aimed far too high, but that is no reason why we ought now to be talking in terms of closing it. I sometimes wonder about the ulterior motives behind the thoughts of those who pronounce that we ought to close Giro. It would be a service to the House if those hon. Members were more honest about their motives.
  It seems appropriate that the debate should take place at the end of a week when we have been dealing with what is known as "freeze and squeeze". I

  1397
  have spent a substantial part of my working life in the Post Office. If ever there was an industry which was subjected by successive Governments—I emphasise the word "successive"—to almost continual freeze and squeeze, it is the posts and telecommunications industry.
  If I may digress, among the first victims of the Government's policy introduced this week and to be debated in Committee next week will again be postal workers. It will require all the negotiating skill of the trade union leaders to ensure that when the period of freeze has passed the increases in wages that are agreed reflect the fact that postal workers in particular have had about 18 months to wait between one increase in wages and obtaining another.
  I pay tribute to the Government for deciding to write-off the £200 million deficit on the postal side of the business. I sincerely hope, however, that in solving one problem which has accumulated over the last few years we shall not be storing up another problem which will have to be solved in the years ahead. The postal side badly needs long-term planning to ensure that we are not faced with the continual problem of loss and write-off and a general lack of confidence in the industry.
  On the very first day that the Minister was responsible for answering questions on the Floor of the House as the new Minister of Posts and Telecommunications I argued that the posts and telecommunications industry was a vital part of the economy and that if, as the Government then said and as they continue to say, they are planning for an expansion of the economy at the rate of about 5 per cent. it is vital that the posts and telecommunications business be fully equipped and able to cope with that economic expansion. At present, the postal side in particular is not properly equipped to handle the expected expansion in the economy.
  Mechanisation should not be used to reduce the labour-intensive nature of the industry. All too often in other industries mechanisation has been introduced at the expense of hundreds of thousands of workpeople whose lives have been shattered by its introduction. I read recently that there are 400,000 fewer workers in
  1398
  manufacturing industry; yet our manufacturing industries now produce much more than they did.
  It goes almost unnoticed, and seems to be a matter of unconcern, that postal workers, and postmen in particular, work longer hours than probably any other industrial worker. Their working week is still 43 hours. Postmen and postal and telegraph workers work six days a week. Some of them arrive at 5 o'clock in the morning, sometimes earlier. There are all the problems of sickness and late attendance that that causes. Postmen in particular have very unsocial working hours. It is not unknown for a postman to start his days work at 5 a.m. and not finish it before 8 p.m.; yet during the whole of that time he will have earned no overtime. He will probably have worked from 5 a.m. to 9 a.m., then gone home, and returned at 3 p.m. and worked to the end of his shift at 8 p.m. The reason for this is the posting and delivery procedure. One of the difficulties we have always complained about is that we have been unable to educate industry to post much earlier in the day and not to store mail up till 5 o'clock or 6 o'clock at night.
  The unions have campaigned for mechanisation since the early 1950s. One problem which is unsolved is that of new buildings. There will obviously be little or no capital return on new buildings to house the new mechanised plants. It was thought at the beginning that existing buildings could be modernised to house the mechanised plants, but this has not been found possible. It will be necessary to incur great capital expenditure on the construction of new buildings for this purpose. I agree with my hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) that consideration should be given to making grant-in-aid available for the construction of such new buildings.
  Massive amounts of capital have been expended on the introduction of postal codes. There seems to be no system of co-ordination between the introduction of postal codes and the setting up of the mechanised plants which go hand in hand with them.
  The Minister referred to the telephone waiting lists, which at present stand at about 220,000 with a waiting period of five months. This shows that there will be a continuing need for a highly efficient

  1399
  and modern postal service. In Britain a telephone is an expensive item. Many hon. Members would think twice about having a telephone, because of its expense, if it were not such a necessity to a Member of Parliament. There will always be vast numbers who do not have telephones and will need to use a highly efficient postal service.
  My hon. Friend the Member for Rutherglen referred also to the social need to serve remote areas. It would be the simplest thing in the world to close post offices here, there and everywhere merely because they were not attracting the optimum number of customers per hour or whatever criterion is used to judge the success of the department. It would be the simplest thing in the world to remove telephone kiosks throughout the length and breadth of Scotland and the remote parts of England and Wales. However, we have a social responsibility to the people, and that social responsibility should be costed.
  I accept the Minister's figures for the decline in postal traffic after the industrial dispute, in which I was involved. To my knowledge, no Minister and no person in a responsible position in the administration of the Post Office has ever paid a tribute to the postal workers who throughout that industrial dispute ensured that no old-age pensioner suffered and that everyone who had a hospital appointment received the hospital notification of the date and time of his appointment.
  During the dispute I found it difficult to convince people I sought to inspire to hold out for as long as they could that after the meetings we attended we went on to various hospitals and social security offices throughout the country to collect large numbers of pension books, postcards and other matters and delivered them in our own cars free of charge so that the sick and the old should not suffer as a result of our industrial action.
  Mr. William Molloy: My hon. Friend has made a very important point. Does he agree, particularly in the context of this debate, that the Government's picking on public em-
  1400
  ployees for special discriminatory action as against the rest of industry makes no contribution to raising the morale of people in public service, particularly bearing in mind the public-spiritedness to which my hon. Friend has referred of the Union of Post Office Workers?
  Mr. Ewing: I am grateful to my hon. Friend for that intervention. I have never known morale at such a low ebb as it was after the industrial dispute in the Post Office. At that time many of us said and did things which were against our natural inclination. This was because we wanted to improve morale and bring the trade union side and management together again to ensure that the long-term interests of the industry were protected and that the scars of that dispute were healed.
  I turn now to the question of marketing and obtaining new business. I believe that the Post Office is unique in this respect. The degree of co-operation between the employees and the management in the Post Office is almost unprecedented and sets an example which could well be followed in industry throughout the country. In the attempt to obtain new business nobody has played a more important part than the postman. It was a long time before I could be convinced of the worth of the introduction of such things as postal buses in the remote rural areas particularly in Scotland, where the postman, instead of delivering by means of a small van, takes a mini-bus and picks up and puts down passengers in the course of his delivery. Postmen readily accepted this.
  I should also like to refer to the important cottage industry in Orkney and Shetland. The people who live in Orkney and Shetland make up tweeds into skirts and suits in their own cottages. Those cottages must be supplied with the yarn. The postman delivers the yarn. Then he collects the suit lengths and the tweed, which he then takes to the mill. None of these items passes across a post office counter. In this way a vital part is played in the economy of a small but important community such as Orkney and Shetland.
  An attempt has been made to take up spare van capacity for delivering goods. The postman collects pieces of furniture, carpets and such articles from the shop, and they are delivered to the customers'

  1401
  homes in remote parts of the country. During my time with the Post Office we repected the idea of accepting household materials for delivery, but attitudes are now changing. Postmen have readily accepted the advent of ad-post, and the Post Office is now keen to have this traffic. The staff have played a vitally important part in attracting new business.
  The parcel delivery service does not suffer from the fact that a certain rate is charged or that deliveries may be delayed somewhat. It suffers from the fact that we have three nationalised industries competing with each other to deliver parcels. The quicker a study is carried out into this aspect and some positive thinking is revealed the better it will be not only for the Post Office but for National Carriers Ltd. and British Road Services. There must be a rationalisation of the parcel delivery service.
  I should like to refer to the part played by the postmen and the P and TO's. The part that they play in the social life of the community is an aspect in which I am particularly interested. My hon. Friend the Member for Rutherglen referred to the installation of telephones in the homes of old-age pensioners. I pay tribute to my engineering colleagues for what they have done. We have in Edinburgh a scheme whereby old-age pensioners are supplied with a red card from the social work department. If old-age pensioners require a pension, all they need to do is to put the card in the window. The postman is under instruction to telephone to his delivery office whenever he sees the card; the inspector in charge contacts the social work department, and help is immediately forthcoming. I intend to pursue this point with the Secretary of State for Social Services because this scheme could be extended throughout the country with tremendous advantage to the old and sick.
  I conclude with a reference to the reservation uttered by my hon. Friend the Member for Rutherglen. I do not want a redistribution of the funds available between post and telecommunications, but the amount allocated to the postal side is far too small and the emphasis placed on the postal side is far too small. May I quote an example? The Minister referred to the exhibition which is taking place in this building; 90 per cent. Of
  1402
  that exhibition is devoted to telecommunications, and only a small corner is allocated to the postal side, where a mechanised sorting machine is on exhibition. I plead with the Minister to increase the allocation to the postal side—we shall probe these points in Committee—so that its long-term future is made secure and so that it is able to serve the economy and the people of the country with the same high standards as have applied hitherto.
  12.36 p.m.
  Mr. John Tilney: I am pleased to follow the speech of the hon. Member for Stirling and Falkirk Burghs (Mr. Ewing), although I do not agree with everything that he said. He said that there will always be a substantial number of people in this country without telephones. I hope that long-term planning will surpass the 80 per cent. penetration which has been referred to by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) as established in the United States.
  The hon. Gentleman also mentioned the dangers of mechanisation. As fewer people create more and more wealth in this country, this trend will continue. We cannot stop it. Hence, what we want is more and more public investment as well as private investment. Surely, therefore, the Bill is to be commended as a massive measure of public investment.
  Mr. Ewing: May I correct the impression that I was afraid of the dangers of mechanisation? I was cautioning the Minister to ensure that mechanisation was not used as a means of reducing the labour-intensive nature of the industry but was used as a means of giving those in the industry much better working conditions.
  Mr. Tilney: Naturally, I hope that will be so. The problem of mechanisation is that in some industries people are thrown out of work, and, therefore, we should try to find work in some ancillary industries so that those who are thrown out of work are given alternative employment.
  I agree with what the hon. Gentleman said about new buildings. I do not know whether he has seen the Post Office in the city of Liverpool. It is a very old building and badly needs renovation. I hope my right hon. Friend will bear that in mind.

  1403
  I accept what has been said about the long working days of those who serve in the Post Office. The great problem is split hours rather than long hours. If that can be overcome in the years to come it will be all the better for everyone.
  I do not agree with what the hon. Genleman said about Giro, and the suggestion that there are many people who are determined to see that it is closed down. Those of us on Merseyside would certainly be appalled if such a decision were made. I do not know whether the hon. Gentleman has been round Giro but when I visited it I was equally appalled at the number of very expensive pieces of equipment under dust sheets. That does not indicate the best possible forethought.
  Therefore, I welcome my right hon. Friend's statement that he will ensure that the money which we are now discussing will be wisely invested. At my home in Liverpool I have a letter dated 22nd January, 1874 from the then Postmaster-General to A. Graham Bell, Esq.:
  "With reference to your letter of 10th instant, I beg leave to inform you that if you will submit your invention it will be considered, on the understanding however that the Department is not bound to secrecy in the matter, nor to indemnify you for any loss or expense you may incur in the furtherance of your object, and that in the event of your method of telegraphy appearing to be both original and useful, the question of remuneration shall rest entirely with the Postmaster-General.
  "I am, Sir, your obedient servant, John Tilley."
  Because of that letter the Bell inventions went to America and were lost to this country.
  How different things are nearly a century later for those of us who have the privilege to go to the Upper Committee Waiting Hall and see what is now being done in post offices throughout the country. It is a most admirable display, which I commend to all hon. Members.
  I regret, however, that there is not shown some device which would allow three people in one room to hold a discussion over the telephone with somebody 100 or 200 miles away. From the days when I was Parliamentary Private Secretary to the Postmaster-General, I have urged that there should be some such device. It would be most useful in business, and it has been a long time coming. I am told, although it was not
  1404
  shown upstairs, that there is now a No. 1 loudspeaker telephone, which need cost only £2·50p a quarter, with a connection charge of £30. Although the Post Office says that the words may not be quite as distinct as it would like, provided that there is three feet between the units it is perfectly reasonable. The Post Office commends, as salesmen naturally would, the more expensive model, the No. 4, at £7·50p a quarter. It is a useful system, and I hope that it can be brought to the attention of businesses throughout the country.
  I look forward to the day when nearly every house has a telephone. It is immensely important that old-age pensioners should have one, since so many pensioners are out of touch with their friends and cannot get about. I hope that my right hon. Friend will plan accordingly.
  I cannot remember the present percentage of telephone penetration, but it is nothing like enough. One is appalled—my right hon. Friend admits it—that as many as 220,000 people are having to wait five months or more for the telephone.
  Generally, the telephone service at home and internationally is remarkably good, and, certainly, I have found our telephone charges to be much lower than those I found when reversing calls from Austria to this country. It is a good story. I wish that I could say the same about the postal services, to which the hon. Member for Rutherglen (Mr. Gregor Mackenzie) referred, I think, as the step-bairn of my right hon. Friend's organisation.
  I have talked to my business colleagues in the provinces and they say that the post delays get longer rather than shorter. I have found this myself. I have often had to dictate letters on a Thursday, to be typed in London and sent to Liverpool, but I have found that they do not arrive until Monday mid-morning, by which time I have left Liverpool to return to London. Therefore, letters that should have been signed, say, on Saturday are not signed until Tuesday night. That is difficult for Parliamentarians, but much more difficult for business men. I was talking to colleagues in Liverpool yesterday and they confirmed that if they cannot be certain that documents they send to London will arrive the next day, which may be vital—for example, if it is

  1405
  the last day for payment to be made on a share call or something of that kind—they will send a courier.
  For years, I have urged my right hon. Friend and his predecessors to initiate some forms of insurance policy whereby, beyond a peradventure, vital letters and documents will be delivered. I know that my right hon. Friend will say that 92 per cent. or more arrive the next day. But if there is a danger of documents being in the other 8 per cent.—or even if it be 6 per cent.—one dare not take that risk. I hope that some insurance of that kind can be offered by the provincial Post Offices. I know that in the event of delay one is told always to send the envelopes back to the head postmaster and that he will look into it. But frequently the envelopes are thrown away. Possibly, businesses are not as careful as they should be in saving the envelopes—not that I believe that head postmasters can do much about it when they have got them.
  Some will say that our postal services are still better and cheaper than those anywhere else. That is quite likely to be true. Our postmen are part of our society. We have had calling at my home in Liverpool for many years a splendid postman called Ginger, who is almost part of the family. Unfortunately, he has now been promoted to the central post office in Liverpool. One always enjoys a talk with him. I understand his problems. There is more and more mail to be delivered and envelopes get bigger. Incidentally, there are many pillar boxes that still have apertures far too small for those envelopes to go into.
  We cannot ask postmen to give the individual service to which we have been accustomed for generations without raising charges. In future, we must consider whether we want to keep our charges low and, for example, put up with pillar boxes at the garden gate or, in the case of blocks of flats, on the ground floor only. The same would apply to office blocks. However, people who are ill must always have the opportunity to fill up a form for special home delivery, possibly at an extra charge. Those of us who have canvassed know that it takes about three times longer to deal with a row of houses which have gardens than with an ordinary terrace street. We cannot have the individual
  1406
  service which has been so much a part of our way of life and still have it as cheap as it used to be. If we want efficiency, we must choose between efficiency and an individual service. It may make it easier, subject to vandalism, and therefore quicker if the letter box of an individual house is placed at the gate rather than at the front door.
  The Post Office is a great national institution. Nearly all its staff are polite and hard working. They often have to endure working through difficult weather conditions. They have a great weight of mail. I do not see why further aids should not be given to them—for example, trollies. People who play golf have trollies on which to carry their golf bags, and that sort of thing could help many postmen in urban communities. I hope that my right hon. Friend, unlike his predecessor in 1874, will consider all such inventions.
  12.50 p.m.
  Mr. Frank Marsden: It is a privilege to follow the hon. Member for Liverpool, Wavertree (Mr. Tilney). He and I travel to the great city of Liverpool and quite often we travel together. I detected in his speech a disappointment with the Giro system. Giro is four years old and it has an investment of about £12 million. There has been mention already of the hostility which exists in certain quarters of the House and among individual Members to the system. I cannot tell whether that hostility is because Giro is losing money or because it is a threat to the Big Five banks. But the Giro is an efficient and civilised method of moving money around and there is so much that the Government could do to help it.
  Most Post Offices in Western Europe operate a Giro system and that, of course, includes countries in the Common Market. A greater degree of Government direction is exercised in Europe on Government Departments to use the Giro system than in the United Kingdom. Value added tax in Europe is directed through the Giro system on government instructions. I am concerned that our Giro is not being used to the full. There is an enormous potential in the facilities that could be provided by the system.

  1407
  I am pleased to see that Giro cheques are to be used for the payment of unemployment benefit throughout Britain. By the middle of 1973 almost all payment of unemployment benefits in cash will have been eliminated. Why should this not apply to other services for the payment of benefits and allowances? Why not pay the old-age pension in that way? With so many sub-post offices closing down, old people are having to travel further to a post office and that causes hardship. On average they have to pay fares of about 10p to collect their pension. More could be done with a Giro cheque than with an old-age pension book.
  Schemes for the collection of rents through the Giro system were presented to local authorities last spring but so far only 36 of all the local authorities have decided to use the facility. That is most disappointing. The new scheme which was announced by the Post Office for the payment of rent allowances will permit payment to private tenants by Giro cheque of rebates under the Housing Finance Act. Local authorities have welcomed the scheme and have said they could not have a better method, but I wonder how many of them will ultimately take it up.
  Many hon. Members feel that Government Departments and the Armed Services should use the Giro system for the payment of benefits and allowances. There needs to be a rearrangement of the usual channels and a Government direction to all Departments. With that kind of help, the National Giro could be a national winner.
  12.54 p.m.
  Mr. Geoffrey Finsberg: In following the hon. Member for Liverpool, Scotland (Mr. Marsden) I am beginning to feel that there appears to be an almost impossible monopoly. With the exception of the Minister, everyone who has spoken so far has come from either Scotland or Liverpool and perhaps it is time for a change.
  Mr. John Golding: Is the hon. Member aware that my hon. Friend who has just spoken represents the Scotland Division of Liverpool?
  Mr. Finsberg: I am sure that the hon. Member will appreciate that is the only reason why I made the comment.
  The hon. Member for Liverpool, Scotland referred to the need to direct Government Departments and local authorities to make more use of the Giro system. I understand his reasoning because it is clearly a view held by most Opposition Members, although not shared by everyone on the Government side, that because the Giro is a State organisation it should be publicised and supported even at the expense of the private commercial banks. I hope that in his anxiety to do that he will not forget that there is also an organisation called the Trustee Savings Bank Association, which is a voluntary non-profit making organisation and makes an important contribution to the National Savings movement and should not be squeezed out. It is not a contest between just the Giro and the joint stock banks.
  The hon. Member for Rutherglen (Mr. Gregor Mackenzie) was commenting on the social costs which the Post Office has to bear, and said that it was a pity that it did not receive some sort of payment for them. He referred to the payment of pensions. The Post Office, however, gets an agency commission from the relevant Government Department for carrying out that work. I was grateful to the hon. Member because last night he told me that he might attack me today. He showed his usual courtesy, first, in warning me and then in not attacking me. He might suggest that courtesy to the Leader of the Opposition who this week, without warning, attacked my hon. Friend the Member for Lewisham, West (Mr. Selwyn Gummer).
  I am glad to support the Bill. I support also the remarks by the hon. Member for Rutherglen that it was a pity that we had not had an opportunity to debate the report and accounts of the Post Office Corporation in the last two years. There would have been some value in debating also the reports of the Post Office Users' National Council. which has been acknowledged by all hon. Members to be the most effective of all the consumer organisations set up under statute since the war.
  In the past three or four years I have had an especial interest in postal matters,

  1409
  wearing three hats. I suppose that rivals the ladies. My first hat I wear as Chairmon of the Postal and Telecommunications Panel of the CBI, the second as founder-member of the Post Office Users National Council appointed by the last Labour Postmaster-General, and the third is because my father-in-law is related to the founder of the Penny Post, the great Rowland Hill. Some of us wish that we still had a penny post which was as efficient as it was in those days.
  I do not doubt that the modernisation and expansion programme that lies behind the Bill is extremely important. It is also right to look for a moment at some of the things that have happened since the corporation was set up under the 1969 Act. Within virtually a month or so of the establishment of the Post Office Users National Council a tariff increase was put before it for consultation and consideration. The council has achieved the success that it has had so far because of the brilliant chairmanship of Lord Peddie, who is an outstanding personality, and because of another outstanding personality in Dame Elizabeth Ackroyd, who is prominent in consumer matters. They, aided perhaps by other members, have shown that consultative councils do not have to be the sort of lap dogs that the Select Committee showed many of them to be. I warmly welcome the fact that the new consultative machinery under the Gas Act does not allow the chairman of that consultative body to be ex-officio a member of the Gas Board, because with that dichotomy of interest he cannot do an independent job fully effectively.
  I said that one of the first things that had to be done in 1970 was to consider the new tariff proposals. These came about because of a sudden change in the target figure which was set the Post Office by the Government. That also raised the problem of the percentage of self-financing that the Post Office had to undertake. It is always difficult to decide how much should be self-financing and how much should be put on the consumer of today to pay for the consumer of 20 years time. Subsequently in 1970 there came a request for tariff increases in the postal services, and these increases were probably more swingeing than they need have been because the request for tariff increases had apparently been held back
  1410
  for some months because of the General Election.
  The report published by the council at the time shows that the estimates of cost inflation and the estimates of the expenses of the Post Office, made by that all-seeing cure-all, the National Board for Prices and Incomes—Report No. 58—were clearly wrong. That is the body that we are exhorted to bring back in some form. For example, it assumed that average earnings would not rise by more than 3½ per cent. per annum, whereas in fact they rose by 5·6 per cent. in 1968–69 and 7·1 per cent. in 1969–70. Postal traffic had not grown at the forecast rate because of the deterrent effect of the 1968 tariff increase. So much for the infallibility of the Prices and Incomes Board, whose demise in its then existing form I do not regret.
  One question that ran through the discussions at that time was whether the new Post Office Corporation need carry the burden of servicing old debts. I welcome the Minister's announcement today of his intention to allow the Post Office, with the consent of the Treasury, to write off up to £200 million of old debt. The servicing of old debts is always a subject that gives rise to controversy between the commonsense approach and the approach of the financial purist. I am glad that the Minister has decided to take the commonsense approach.
  We are being asked to approve a vast programme of capital expenditure, some £4,000 million in five years. My right hon. Friend spoke of the Post Office being able to get money from the National Loans Fund. Does he propose to make any use of Section 35(3) of the 1969 Act, which permits overseas borrowing by the corporation with the Minister's permission? So far as I am aware, although some nationalised industries have used this power, the Post Office has not done so yet. Has the Minister an open mind on the issue? Knowing him, I am sure that he has, but I should like confirmation.
  I hope that the corporation is capable of knowing what it wants by way of equipment and that the Ministry is equally geared to know what should be happening. In every room in the Palace we have modern grey telephones with press buttons, but they are not capable

  1411
  of being used effectively. As you press the button, Mr. Deputy Speaker, and flick up to the 10 figures that you need to telephone your constituency you have to wait an enormous time while there are whirrs and buzzes in the receiver, because the present equipment at the exchange is not capable of translating your fast action into fast action at the exchange. We are back in the position of asking what we do with the obsolescent Strowger and Crossbar equipment which does not do justice to the new highly efficient telephones.
  Mr. Rost: Is not this out-of-date equipment still being installed, and will it not probably be in service for at least another 30 years, so that one has to look at this capital investment in greater depth?
  Mr. Finsberg: I was careful to use the word "obsolescent" and not "out-of-date" because it will certainly be used for a long time. I was about to give one or two reasons why we have to look fairly closely at the Post Office's proposals.
  Some form of electronic equipment is certainly needed if we are not to be left behind. The excellent publication produced by the Post Office refers to the difficulties—and I understand them—that the Post Office is experiencing in finding the right equipment. None the less, I do not believe that anyone will say that under the present or the Labour Government, the Government before that or the Government before that the Post Office has been sufficiently dynamic and sufficiently foresighted. It has consistently under-estimated demand. I blame the management under the direction of all the Governments involved. It has consistently failed to look far enough ahead and realise that we had to have special and new equipment.
  Mr. Molloy: I warmly agree. Is not that related to the fact that hon. Members cannot get at the management of the Post Office, that we cannot ask Questions in the House about it? There was an extraordinary situation the other day when, in response to a Question of mine, the Minister for Posts and Telecommunications said that it was a matter for the Post Office.
  Mr. Finsberg: I was not here at the time, but I have read HANSARD for many years and I think that it was equally difficult to get answers when one could question the Postmaster-General. My view is that the Post Office ought not to be questionable in the House. If it is to be a corporation, doing a job of work, it should be allowed to get on with its work and be accountable only to the Minister and through an annual report and not by question after question, for questioning is not the way in which a great industry can do a good job.
  Why does the Post Office need to retain its monopoly over equipment in the home? Why cannot its supply, like gas and electricity, be a service to the customer's home, leaving the customer to choose from a wide variety of equipment, duly authorised by the Post Office and accepted by the Post Office as compatible with the wires going to the home? The instruments could be made by a variety of manufacturers and sold by a variety of suppliers. I see no merit and no justification in this remaining the sole prerogative of the Post Office.
  The hon. Member for Rutherglen regretted that the Minister had not allowed the Post Office to use its manufacturing powers. I should like to see these manufacturing powers repealed in the 1969 Act because they do not serve any purpose.
  I welcome the Minister's forthright statement on waiting lists and welcome his determination to reduce it as quickly as possible to a sensible period. I regard a "sensible period" as a maximum of 20 days. That is shown by the graphs which appear in the reports of the Post Office Users National Council.
  If the Post Office is to have the backing of this House in spending £4,000 million, it must be more adventurous and willing to experiment. It must see what demand there is for giving every telephone subscriber a free allowance of calls on a quarterly rental. In Canada most local calls are free. If a person wishes to dial from Toronto to Ottawa he must pay, but a local call within the Toronto area is free of charge. This would be a welcome improvement, but the Post Office does not appear to be willing to try it out.

  1413
  Why does not the Post Office at Christmas time try selling stamps at a discount? It complains about falling trade, but if the Post Office were to sell stamps at a lower price than normal during the period of, say, 1st December to 20th December, with only the guarantee that that post would be delivered before Christmas day it would tend to even out the peaks and troughs about which we heard and would give a chance to the Post Office to get back some of the business it has lost. I hope the Post Office has an open mind on these matters, though I have reason to believe that it has not.
  Do crown post offices need to be in prime positions on the ground floor? Could they not be situated on the first floor of buildings, as are many banks, with escalators to avoid old people having to walk upstairs? If the Post Office is to get extra business, it must be more dynamic in telling subscribers and would-be subscribers what they can be offered. The Post Office often hides its light beneath the proverbial bushel, and the customers do not know what is available to them because the Post Office just does not tell them the facilities it has to offer.
  Is the Post Office using modern techniques to assess its performance? I quote from the report of the Post Office Users National Council for September, 1970, a document which has been distributed to hon. Members:
  "… the Council as representing the users strongly urges that there should be some recognisable and effective means to assess current and future performance of the Post Office, particularly in sectors such as pricing policy, productivity improvement, service standards and response to changes in business environment. The nature of such an exercise would be the responsibility of Government, but the information generated should be available to the Users' Council if it is to be effective in pursuing its statutory responsibility."
  There does not appear to have been much progress on this score since September, 1970.
  Does the Post Office costing method provide a satisfactory guide to prices? I quote from a document circulated by the Post Office Users National Council, to all hon. Members, dated April, 1972:
  1414
  "A major conclusion of the Report of the National Board for Prices and Incomes No. 58 on 'Post Office Charges' was that the Post Office's costing system did not provide a satisfactory guide to prices. The Post Office accept that their existing system is not perfect and since the NBPI report in 1968 have been exploring, we understand, the very complicated technical and economic problems involved in the more complete form of systems analysis which the report called for. They have had advice from consultants but, because the practical difficulties are great, progress has not been rapid."
  The word "rapid" is something of an understatement. I believe that there has been no recognisable progress.
  Why is the Post Office so backward in developing telephones on major inter-city trains—a subject which has been pushed hard by the hon. Member for Dudley (Dr. Gilbert) as well as by myself, but with virtually no response from the Post Office? Furthermore, why has the Post Office been so slow in helping to develop car telephones, and bleepers for people to carry round with them? If the Post Office is worried about these new methods involving too much in the way of risk, then private enterprise may well be prepared to run the risk. Why not let the Post Office get out of the business, let private enterprise run it, and the Post Office itself make a profit from licensing those who are running such a system. It would appear that there is something of a dog-in-the-manger attitude in the Post Office, but I hope that that is not true.
  I turn to the speech made by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor Goldsmid), who did not believe there would be much objection of there were only one delivery a day. He may have overlooked the comments made by the Post Office Users National Council in January, 1972, when it said:
  "The proposal to give only one retimed and extended delivery a day in residential areas of towns has attracted extremely strong opposition from almost every quarter."
  I hope that the Post Office will not pick up my hon. Friend's remarks and at a later stage use them to justify the abolition of the second delivery.
  My right hon. Friend the Minister has a great deal of responsibility and must justify to the House this enormous expenditure. I support the idea that before a final decision is taken on the type of equipment that is needed the House

  1415
  should have a chance to debate the matter and not afterwards.
  I hope my right hon. Friend will use his powers in the Act to tell the Independent Broadcasting Authority that it should not try to tell the public what it should look at on television at Christmas. Christmas is the time for light entertainment and not for the compulsory broadcasting of opera. However, I am sure that if I continue with this line of argument I shall be ruled out of order.
  I conclude by saying that the House owes a great debt of gratitude to the Post Office and its staff. I have said nothing which is meant to be destructively critical. I have tried to be constructive. From time to time the Post Office needs to be shaken out of the sort of attitude outlined by my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney). Because it has always proceeded in a certain way, it has to be convinced 400 per cent. the other way before it brings about any change. I would be much happier if it needed to be only 100 per cent. persuaded to change a certain course. I regard the Bill as a reasonable measure, and I hope that it will proceed speedily through Committee and on to the Statute Book.
  1.20 p.m.
  Mr. Sydney Bidwell: The hon. Member for Hampstead (Mr. Geoffrey Finsberg) made a wide-ranging speech which I do not intend to follow in detail. The hon. Gentleman undoubtedly has great experience flowing from his business interests and his membership of the Post Office Users' National Council. I have just looked up the membership of that council, and I must point out that I shall be referring in my speech to part of its work, though perhaps in not such benign terms as did the hon. Gentleman in his speech.
  I share the hon. Gentleman's admiration for the work of the Chairman of that Council, the noble Lord, Lord Peddie. I do not recollect ever having met Lord Peddie, but I understand that he was in the co-operative movement. When one is brought up in that movement, one learns to combine commercial aptitude with a spirit of service. Because Lord Peddie happens to be a good man for the job, as he undoubtedly is, it is
  1416
  obvious that he has drawn on a large fund of background experience.
  The hon. Member for Hampstead is a doctrinaire Conservative. That comes off him all the time. I am not exactly a doctrinaire Socialist but I hold firmly to my socialist beliefs, although it is difficult to do that in this place. However, the hon. Gentleman will not be surprised to know that I do not share his view that the Post Office should not have the power to go into manufacturing. It is no good our saying that such powers are not used and therefore that there is no justification for their existence. They should be used. The Post Office is seriously under-equipped and, if policies of this sort were pursued vigorously, manufacuring industry could be put into those parts of the country where there is serious unemployment and where private industry is not likely to go. A great deal of employment could be created if the Post Office and other nationalised industries were able to engage in manufacturing.
  I share wholeheartedly the hon. Gentleman's view about the dedicated service given by postal workers. That goes equally for those on the telecommunications side of the industry. I was not surprised to read that the Post Office Engineering Union had decided to call upon its members to give voluntary labour to install telephones in old people's homes.
  I do not bring to this debate the background experience of having worked in the Post Office. My background is that of the railways. However, one discerns a tremendous comradeship and spirit in these great industries—nationalised, as my own industry was and as the Post Office has been ever since its inception. It is precisely because the Post Office is a nationalised industry that it has to look and look again at the extent to which there is a counter-balance of democratic participation and democratic check, and that is where the Minister comes in.
  The reason why I am participating in this debate is that I wish to draw attention to the anxiety which is being felt in Southall about a sub-post office which has been closed already and another closure which is contemplated, following a decision to resite the main Post Office in my very difficult constituency. I do it with some trepidation because of my regard for my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding)

  1417
  who has a professional interest in the Post Office Engineering Union and is an ardent campaigner on behalf of his members, as well as being a diligent Member of Parliament, doing great service in the Opposition Whips' Office. However, I do not apologise to him or to anyone else for taking part in this debate.
  The hon. Member for Hampstead may be followed by a member of the UPW if there is a Labour victory at the next Election—
  Mr. Golding: He will be.
  Mr. Bidwell: Nothing is certain in politics. The time between now and the next General Election is unknown. For that reason, I cannot comment on my hon. Friend's intervention.
  I appreciate that the Minister cannot comment on specific closure decisions, but I hope that he will turn his mind to the need to juxtapose machinery for checking what might turn out to be bureaucratic excesses.
  The two Post Office closures that I have in mind was given some publicity in the London Evening News, following which I received several letters from other parts of the South of England voicing similar anxieties in other localities. In addition to the Post Office Users National Council and the Post Office itself, I have no doubt that the Minister has received similarly anxious letters.
  I am not competent to comment on the Minister's observations concerning telecommunications developments. The prospects sound very exciting. Others of my hon. Friends are more competent to speak on these matters. However, perhaps I might be permitted to make one minor digression. I have always thought that when we speak of the importance of putting old people in touch by telephone, we ought to be equally anxious to put money in their pockets so that they may visit their families. It is not enough for them to be in telephonic communication, particularly if they have large families which cannot visit them. They need physical as well as intellectual stimulus, and they should be given the wherewithal to get about. The present rate of the national retirement pension is such that they are handicapped physically from visiting their families.
  1418
  The weakness in the Minister's speech, despite the gentle attitude adopted by my hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie), was that he did not emphasise that the postal services are not simply a commercial entity. The Post Office Users National Council made some extremely pertinent observations in its 1971–72 Report on post office closures and reorganisation. In my view the Post Office is running ahead of itself.
  I return to the specific closure in my own constituency. It has resulted in old-age pensioners having to cross a busy road junction in order to draw their pensions whereas before they used the sub-post office, which happened to be opposite a police station. In fact, one old lady wrote to tell me how happy and comforted she was by the nearness of the police station. I appreciate that a sub-post office cannot be kept open for the convenience of one old lady, but the office in question did a considerable amount of business.
  I suspect that the problem in this case is that plans have been on the stocks for 20 years and that a somewhat doctrinaire attitude has been adopted to them. It has been forgotten that account ought to be taken of events in the intervening years. Every schoolboy knows that a considerable amount has happened in Southall in the last 20 years, especially in the way that old people have been affected by the changes that have come about. By and large, I am proud of the way in which the situation has been dealt with, because we have the largest Asian community in the country. To see this multi-racial, multi-political, multi-community activity protesting about the closure of these sub-post offices was a joy to behold.
  According to the documents I have, not only do letters flow between the Minister, the Users Council and the Post Office, but telephones are used. Therefore, I hope that a telephone or two may be used to find out what this is all about. We are not asking for the moon. We are simply asking that the closure be delayed until we can ascertain the location of the new central post office. It is no longer the crown post office. We now have to be more up to date. However, I understand that the term is still used in the industry.
  I make no apology to the House for making the most of this occasion for a

  1419
  constituency purpose. At the public meeting of protest there were present not only the Labour MP who was born in the district, but the prospective Conservative candidates who will oppose me at the next General Election, the President of the Chamber of Commerce, the President of the Indian Workers' Association, a representative of the old-age pensioners, and a representative of the Community Relations Council. Those people got together and came to the considered view that the closure should be delayed. Therefore, someone should take notice.
  Earlier this year I had a letter from Lord Peddie of the Post Office Users National Council. In one paragraph he expresses considerable sympathy and has grave doubts about the location of the new post office. This situation can be multiplied all over the country. However, I have my eye very much on Southall High Street and Broadway. Lord Peddie's council questions the immediate plan of the juggernaut of the Post Office Board and the attitude of the local head postmaster, who wants to go ahead and seeks to justify the abrupt closure of two sub-post offices. One has already gone. There is no fierce argument about that at the moment. We are concerned about the other.
  I ask the hon. Member for Hampstead—it is fortuitous that I should follow him this afternoon—to verify that in its report for 1971–72 the Users National Council, of which he is a member, recommends that sub-post office closures should not be substantial. The report acknowledges that in the changes there will be a lot of headaches and tears, but suggests that there should be some mitigation and that there should be a deep look at what is happening. It also suggests that any changes should be brought into gear more smoothly, so to speak, than would be the situation with an abrupt closure of two sub-post offices following the relocation of the main post office.
  When the Users National Council takes a studied view, what happens? Surely the matter is not closed. I do not know what happens after that. I do not want the position to be "We told you so." I want it tested on a completely different basis. I want the matter carried over so that we can check whether the local head postmaster's attitude and argument is
  1420
  correct about custom falling away. In fact, custom has increased recently. The postmaster's earnings have increased by virtue of the closure of the office at the other end of the town. However, that may not always be so, and we must keep an open mind about it.
  There has been a great technological revolution regarding telephone changes and the provision of telephones, telecommunications, and so forth, about which I am not competent to speak. But associated with the telephone business is the criteria of service. Representatives of the Post Office Board attended before the Select Committee on Nationalised Industries. I have here the Second Report of that Committee. One passage I have marked, referring to the rÔle of consultative bodies, states:
  "If this is to be their rÔle then consultative bodies should be at arm's length from their industry and seen to be so. It is the duty of the boards to manage their respective industries."
  With respect to my hon. Friend the Member for Ealing, North (Mr. Molloy) who earlier made his usual vigorous intervention, it is inevitable when an Act like the 1969 Act is pushed through Parliament that there should be questions on the day-to-day administration of the Post Office. I always thought it a bit much that the Postmaster-General, as he used to be, should be asked why a telephone kiosk had been put outside somebody's bedroom instead of on a green space across the road. While it is important to gain the ear of the Minister on a regular routine basis, if that should be the situation we should be wide open all the time to asking, for example, the Minister for Transport Industries why a particular train is cancelled in consequence of a foggy morning. It is better for us to try to see the chairman of the board than to ask questions which the Minister has to sub-let in any case and we get very much the same result in the end.
  Concerning the consultative machinery or the Users National Council being kept at arm's length, that is inevitable, and there is a lot of logic in what was put before the Select Committee. However, I do not want it to develop to a bargepole's length, which seems to be happening in this instance. I claim and demand that attention be paid to this

  1421
  matter now. This is a national pattern to which the Minister should address his mind.
  1.38 p.m.
  Mr. Peter Rost: Before hearing my right hon. Friend introduce the Bill this morning my support was distinctly cool. After hearing his excellent exposition, I must admit that my support is still only rather luke warm.
  Before outlining my reasons and anxieties, I should like to make it clear that I have no complaints about the postal or telephone services in the East Midlands, particularly in my area of Derbyshire, where minor difficulties affecting my constituents have always been speedily and efficiently sorted out by local postmasters and telephone managers. On the whole, I have nothing but praise for the very good service that is provided. It is therefore not on that account that I wish to make any comments or criticisms.
  What really worries me about the Bill is that we are asked to cancel debts, to provide a vast open cheque and we are not offered any additional parliamentary scrutiny over how the money is spent. It is on those matters that I wish to concentrate my remarks.
  My first major concern is over the estimate of capital expenditure over the next five years of £4,000 million, of which it is estimated half will come from internal resources. I want to challenge that estimate. The more one looks at the figures, the more concerned one ought to be about how reliable that estimate is. It means that over the next five years the cash flow of the Post Office will have to be £2,000 million if half the capital expenditure projected is to be met from internal resources.
  A cash flow of £2,000 million over the next five years is a delightful projection of figures for the past few years. It certainly bears no resemblance to what has been achieved in cash flow over recent years. Is the House satisfied that that estimate can remotely be achieved without one of two things happening—either a huge increase in tax and costs to the consumer or a huge improvement in efficiency? One of the two will have to happen; otherwise there will not be even a remote possibility of the Post
  1422
  Office achieving its estimated cash flow of £2,000 million over the next five years.
  The cash flow over the last financial year, 1971–72, was £238 million, of which £202 million came from depreciation and £36 million from overall net profit. Over the previous two years the net cash flow was lower—£188 million in 1970–71 and £176 million in 1969–70. That produces, over the past three financial years, a total cash flow of £602 million, or an average of about £200 million, and yet we are asked to believe that over the next five years the Post Office will achieve an average cash flow of £400 million per annum. I maintain that that can come about only by substantial increases in charges to the public, or—or in combination with—a big improvement in productivity. Until there is further clarification I am rather anxious about which of the two alternatives will come about.
  If prices are increased to improve the cash flow, there will be strong consumer resistance, and some services will almost certainly be priced out of the market. This will probably lead to further losses rather than increased income, and we shall end up with the same sort of situation and problems that face other nationalised industries, such as the railways, which have virtually priced themselves out of certain of their markets.
  I do not believe that increasing consumer charges on the scale projected will be acceptable. I therefore urge my right hon. Friend to assure himself that the increased flow which the figures anticipate will come not primarily from increased charges to the public but primarily through greater efficiency.
  Mr. Golding: Would the hon. Gentleman tell the House what productivity increases there have been in the Post Office over the last 10 years?
  Mr. Rost: I am not in argument with the hon. Gentleman. I am not, as I hope my argument will show, challenging that that is impossible. Nor am I saying that there have not been big increases in productivity over recent years. Obviously there have. The vast capital expenditure must lead to improved productivity, and I do not intend to quarrel with the hon. Gentleman about that. There have been big improvements in recent years. What I want to emphasise is that if these targets

  1423
  are to be achieved the Post Office, and my right hon. Friend who is responsible to the House for this expenditure, cannot afford to be remotely complacent.
  I want to make one or two suggestions which I hope will be looked at, if they have not already been, which might make some contribution towards achieving greater efficiency over the next five years and, therefore, avoiding what at the moment seems the only alternative—huge increases in charges.
  One or two hon. Gentlemen opposite have chastised me for daring to make critical remarks about Giro. I do not wish to say a great deal about that now, other than to say that I have no ulterior motives in making what hon. Gentlemen opposite describe as provocative remarks about it. I believe that it is not a sensible function for the Post Office to run a service which is not basically an essential public service. I do not believe it essential for the Post Office to run a service which does not appear to be within range of profitability. Also, I do not believe it is sensible for the Post Office to be running at a loss a service which is not essential and which could, in my view, be run at a profit and more effectively, by private enterprise.
  I am not suggesting that Giro should be closed. I believe that it should be hived off. If it is such a brilliant idea, and can be successful, as I believe it can be, why not let private enterprise or the banks have a go at running it? After all, the State is responsible for building motorways, but the Government do not have to maintain or run service stations on them. There is no reason why this side of the activities of the Post Office should not be franchised out and no longer be a liability, as I believe it will continue to be if it is run on the present basis.
  I do not wish to dwell further on the subject of Giro. I started from there because hon. Gentlemen opposite have challenged me upon it, and because I believe it is a good starting point for improving the overall financial performance of the Post Office.
  I now come to the main area in which I hope efficiency and productivity will be improved. This relates to a more substantial use of the facilities which have
  1424
  been installed and for which public expenditure has been incurred. I refer particularly to the telephone service. Our telephone service is under-used. The average telephone in this country has only two-thirds of a call a day. This compares with about four times that amount of use in the USA and almost similar figures in other high living standard countries.
  Yet the cost of installing such a 'phone is approximately £150, of which the subscriber pays only a proportion—although it is high enough—amounting to £35. The private consumer of a telephone often regards it as something of an ornament or status symbol rather than a practical part of his living in the same way as a fridge. Part of the reason is lack of promotion by the Post Office. A much heavier use of the telephone, once installed, would make a big contribution to income and probably reduce overheads and costs.
  The Post Office could also do a great deal more to increase its income and, therefore, reduce its costs through more dynamic marketing. I do not mean to be critical, except constructively, but a good deal of so-called selling space is wasted. Prime sites all over the country should be better used. There are plenty of ancillary facilities within post offices where space could be leased for exhibition or selling purposes so that income could derive from these prime sites.
  Far more advertising could be achieved. The vast number of Post Office vehicles could carry some commercial advertising. Something is done in this direction in kiosks and telephone directories, but not nearly enough. A far more commercial approach could increase income substantially. In rural areas, mini-buses could help to provide a social service where the ordinary bus services have ceased. Here again, a more commercial approach to an existing service would produce more income.
  Then there is the important matter of the property owned by the Post Office—one of the largest landowners in the country, if not the largest after the railways. There is a great deal of scope for property development with a more commercial approach. New buildings for post offices could contain more office

  1425
  accommodation sub-let to other customers. If the Post Office does not want to develop its properties itself, it should sell them off and rent accommodation in them, letting somebody else develop. A great deal of capital is being under-utilised, and income which should be accruing to the Post Office is not doing so.
  These are one or two areas in which a more commercial approach could help the Post Office to meet the cash flow figures in the Bill. There are other ways in which productivity could still be improved. I am appalled when I see, in 1972, in some rural areas, postmen riding bicycles and carrying heavy sacks. There must be a more efficient and comfortable way of doing the job. I hope that this is considered, not only to make the job less unpleasant but also to improve productivity.
  My main point, therefore, is that, of the £4,000 million which will be spent over the next five years, half will have to be found from the Post Office itself. I hope that this will be achieved through genuine reductions in costs and improvements in efficiency rather than through putting up the charges, which is the easy way out, and has been in past years.
  My second concern is about scrutiny, and ensuring that we get good value for money from this huge sum. Although I am not an expert on this—I know very little about it—I doubt whether there is proper public accountability by experts, in the House and outside, as to the type of equipment, the forward planning of that spending and whether in the end we shall have the right system.
  Therefore, I hope that the Minister will give further thought to this an include a provision for at least an annual review or for regular scrutiny of the taxpayers' expenditure by a Select Committee. An important principle is at stake. Other nationalised industries come under fairly close scrutiny and parliamentary supervision.
  Without wishing to interfere in the day-to-day decisions and management of the Post Office—that should be resolved by appointing the best management and letting it get on with it—I believe that there is still a rôle for Parliament in accountability of such large sums in advanced technological fields. This is
  1426
  crucial; in telecommunications we are moving into fairly new technology, and we want to be sure that the decisions are right and that the spending is sensible and in the best public interest.
  My final point of concern is the clause which proposes to write off past debts of up to £200 million. I accept my right lion. Friend's argument that these debts will not be recovered by future profits and, therefore, why should we allow them to he carried forward. On the other hand, one ought to think fairly carefully before automatically writing off these debts. We are told that by doing so we shall, perhaps, clean the slate and create a fresh spur for greater effort in the future. As long as that were true, and if we could be certain, I would support that suggestion. One wonders, however, whether it is just a question of wiping the slate dean, as we do every now and then with most of the other nationalised industries by writing off debts in order to allow a fresh build-up of new debts. If that was so, it would hardly be a spur, except a spur to allowing a fresh start to indebtedness. This regular ritual which Parliament has to go through of writing off these nationalised losses is almost immoral in that it sweeps under the carpet the fundamental problems and conceals the overall effectiveness of our public sectors as a whole.
  Having said that, I am sure that my right hon. Friend will not criticise me too much for having expressed my doubts on this matter. I appreciate that it is difficult to carry forward these losses, but I would have hoped that the past losses of the Post Office, rather than being written off in the Bill, could have been funded by annual payments by the Treasury for those social services which the Post Office is asked to carry but which can never be an economic proposition. Other hon. Members have mentioned the desirability of funding through special grants certain services which will always be uneconomic. It would make sense to have some of these services separately costed, in the same way that the railways do this, and to subsidise them independently, rather than to allow the present system to continue, in which the charge for a letter from Cornwall to the Outer Hebrides is the same as that for a letter from one street to another in a densely

  1427
  populated area of terraced housing. Obviously the costs of those two items are wildly different; yet unless we have separate costing to the customer, which is impractical in the case of letters, the State ought to appreciate and accept that a certain section of the postal service and ether services of the Post Office can never be economic and should, therefore, be separately subsidised, rather than allow the present false system to continue.
  I offer my continued lukewarm support, hoping that in Committee, perhaps, some of these matters can be resolved.
  Mr. Speaker: Order. I know of five hon. Members who want to speak before the wind-up speeches. I hope that those who catch my eye will bear in mind the time available.
  2.4 p.m.
  Mr. John Golding: Telecommunications is and should be expanding rapidly, and it is vital that that expansion continues. I remind the hon. Member for Derbyshire, South-East (Mr. Rost) that over the last 10 years productivity in telecommunications has increased by an average of 4 per cent. a year, and for the grades represented by the Post Office Engineering Union it is very much greater. This is a very good record which has been achieved to a great extent by the acceptance by the staff of changes of work practice, and these changes have often been imposed by the union. Admittedly, this increase in productivity was also helped by the very rapid increase, the doubling of investment which took place during the period of the previous Labour Government, between 1964 and 1970. It is important that these increases in productivity continue. It is important for the customer, for the staff and for the community which owns the system and, I hope, will continue to own it.
  In its excellent booklet, the Post Office predicts that during a period when the size of the service increases by 50 per cent., staff numbers will increase by only 10 per cent. That is equivalent to an improvement in output per employee of 7 per cent. per year. The prediction is made for ever-increasing productivity. These are great expectations. They cannot be realised, however, if the staff are discontented, if they believe that their effort
  1428
  will go unrecognised. The Government will need an incomes policy very different from that which they have now if staff are to be encouraged to co-operate with management. One cannot overestimate the contribution made by the staff to the Post Office. For most Post Office engineers, telecommunications is not a job but a lifetime career, and they care very deeply for the service in which they have invested so much skill and knowledge. If the Post Office is to get the best return from its investment in equipment, the experience of its workers must be taken into account.
  I sometimes think that in a technological industry the management sometimes cares more for the equipment than for the men who maintain it. Today consultation generally takes place after decisions have been taken. Members of the Post Office Engineering Union, at all levels, want to be consulted before decisions are made which affect their entire working lives. The Post Office has nothing to fear from this because the Union has never been Luddite in its attitude. For longer than the Post Office management or politicians in the House, it has advocated the expansion of the investment programme. I, as an officer of the union, remember when the Post Office scoffed at our proposals for 10 million telephones. Now there are 16 million. I remember when we called for a 5 per cent. growth rate, and it is now 8·8 per cent.; and when we called for the establishment of a telephone in every home. The Post Office has not quite got there yet—it wants telephones in three out of four homes—but I am sure that it will come to it in time. Because we believe them to be vital to the expansion and modernisation of telecommunications, we strongly support the investment proposals put forward by the Post Office in its booklet on investment for the future.
  There is so much to be done in the telecommunications service. Firstly, the waiting list must be ended, although in saying that, we have to acknowledge that two-thirds of the record number of a quarter of a million people waiting for telephones are waiting not because of any defect in the arrangements of the Post Office but because of the failure of GEC-AEI, Plessey and Standard Telephones to honour contracts and deliver equipment on time. Having contracted to deliver

  1429
  on time, the responsibility should be on the manufacturers to get the exchanges built on time.
  Secondly, the Post Office must almost double the number of exchange lines by 1981 if it is to achieve the penetration achieved by Sweden today, and even then Britain will still lag far behind the present American situation.
  Thirdly, the compulsory sharing of the telephone service must end. Many people in my constituency object to a shared service. Every week people write to me objecting to being told in harsh terms by the Post Office that they are to lose their exclusive service and are to be put on to a party line. Nearly 2 million subscribers have to share the service.
  Fourthly, the system must be modernised. Over the last few years there have been small improvements in the quality of service, but we cannot have an acceptable standard of service for the public until the system is modernised, preferably by the introduction of the TXE 4 exchanges. The Select Committee on Nationalised Industries is doing the job that the hon. Member for Derbyshire, South-East, says that someone should do. Without wishing to prejudice the discussions on the Select Committee, I state my belief that, although it will be expensive, the Post Office Board should in the next few weeks decide to go ahead with the introduction of TXE 4 exchanges. The engineering considerations are that, although such exchanges will be expensive, they will give us the best available telephone system.
  Fifthly, we need also to provide for a rapid expansion of data transmission. I hope to develop this point in Committee.
  Sixthly, we want the development of an integrated system of telecommunications which will provide a common carrier to homes for telephony, television, radio, meter-reading, and so on. There is a vast horizon opening up for telecommunications of which we must take advantage. Those who regard this as an area equivalent to Concorde or the TSR 2 are mistaken.
  The need is great. If Britain is to have a modern telecommunications system, there must be massive investment. What we must discuss here and in Committee is how to finance the modernisation and
  1430
  expansion. We must first think in terms of savings. If the Post Office produced some of its own equipment, the total cost could be reduced. There is still no evidence that the Post Office is buying equipment from the manufacturers at the right price. As a check, if TXE 4 exchanges are introduced at least part of the new equipment required should be directly produced by the Post Office.
  The Post Office is also paying too much in interest charges. Last year £137 million was paid to the Treasury. The 1971–72 borrowing rate of 8 per cent. to 9⅝ per cent. was far too high, and the Post Office should be free to borrow at lower rates.
  Mr. Rost: I should be interested to hear the hon. Gentleman's views as to where the Post Office would borrow at a lower rate than the current rate, which is up to 9 per cent.
  Mr. Golding: The hon. Gentleman will have the benefit, should the Committee of Selection so decide, of hearing me develop that point in Standing Committee.
  Although savings should be made, the Post Office must still make or borrow the vast amount it needs for investment. Much must come from the service itself. Last year £58 million in profit and £189·2 million in depreciation was ploughed back. Each year the profit, however large, has to be reinvested in the service.
  The Post Office will not, however, be able to raise its capital in this way if prices are kept artificially low. Price increases in recent years have been very moderate, due to the increases in productivity that I have outlined. Between 1964–65 and 1970–71 telephone charges increased by only 18½ per cent. compared with a general price rise of nearly 42 per cent.
  The Post Office Engineering Union research department has shown that most countries have a much dearer telephone service than Britain. It is not desirable on either economic or social grounds to increase the charges for residential subscribers. It is important, however, that business subscribers be charged rates which reflect the heavy cost of providing facilities for peak hour calls and rates which will produce the level of profit which private business itself expects from commercial activity.

  1431
  The Post Office should adopt two standards when charging. It should recognise that the residential telephone is used for social purposes and charge lower rates accordingly and that the business telephone is used solely for commercial purposes and charge much higher rates.
  We need, however, to persuade residential subscribers to use their telephones more. The calling rate in Britain is about half that of Canada, Japan and the United States. The Post Office has not paid sufficient attention to this problem. Taking up the point made by the hon. Member for Hampstead (Mr. Geoffrey Finsberg) that there should be some free calls, the provision of free local calls might well lead to an increase in trunk dialling.
  The Post Office Engineering Union agrees with the assertion of the hon. Member for Hampstead that there should be a more aggressive strategy in marketing by the Post Office. There are ways in which the Post Office could increase its revenue. It could even now sell the telephone in areas where exchange equipment and cable are not only available but lying idle. It could sell more additional facilities such an answering facilities and burglar alarms. It must also develop the market for extensions.
  A great challenge faces everyone in telecommunications. We cannot yet achieve my aim, which is to get a telephone in every room of every home, but there is great potential for modernisation, for growth, for the development of new opportunities. If that challenge is to be met, the investment that the Bill makes possible is vital. The Minister may not be the first, and I hope that he will not be the last, of the big spenders.
  2.18 p.m.
  Mr. Christopher Woodhouse: I apologise to the Minister for having been unable to be present when he introduced the Bill. I had to attend a meeting in another part of London. I have made inquiries about the content of my right hon. Friend's speech and I hope that I shall not retrace ground that he covered.
  I join hon. Members on both sides in paying tribute to the employees of the Post Office, the postmen who deliver the mail and the operators of the telephone service. I live in a country area
  1432
  where our local postman delivers the letters and collects them, which is a great convenience, and also delivers the daily newspapers, so I have every reason to welcome his daily arrival.
  I want to ask the Minister one or two questions and to offer him one suggestion. My questions relate directly or indirectly to the finances of the Post Office, which are the subject of the Bill. First and foremost, may we take it that the increased borrowing powers under the Bill will make it unnecessary to increase postal charges in the foreseeable future? Secondly, what progress has been made in introducing and putting into operation the postal code system throughout the country? Not long ago when I made inquiries about it I was informed that it was still in operation only in certain selected areas and not throughout the country.
  Thirdly, could my right hon. Friend tell us what progress has been made in defeating vandalism in public telephone boxes? A few years ago a child in my constituency died because when the father needed to call a doctor he was unable to find on the estate where he lived any public telephone box which had not been put out of action by vandalism.
  Fourth, could he tell us what progress has been made in the provision of telephones under the terms of the Chronically Sick and Disabled Persons Act, and in particular on whom the cost of providing these telephones falls? Does it fall on the Post Office or on the local authorities?
  Finally, I come to a point on which I have a suggestion to make. I recently learned to my surprise that in my telephone area—and I understand this is general throughout the country—it is the practice of the telephone manager when a telephone is installed in a council house, but not in private property, to insist on payment of the connection charge in advance. In the case of private property the connection charge has to be paid only on receipt of the first quarter's bill. This seems to me to be a very invidious and unnecessary discrimination. I have talked to my local telephone manager about it and he entirely shares my view, but he tells me that he has no alternative but to implement what is the national policy of the Post Office.

  1433
  I am aware that the Post Office, like other nationalised industries, suffers severely from the problem of bad debts and I would accept the argument if it were advanced—and I presume it would be—that the great majority of bad debts arise from tenants of council houses rather than from private tenants. But it is surely unnecessary to discriminate in this way. All that is necessary is to insist that every new telephone subscriber pays the connection charge in advance. I find it difficult to think of any other service which is provided, whether by public or private enterprise, which would not require that sort of payment in advance. This would eliminate the discrimination. It would relieve the telephone managers of a very individious task which they find distasteful. It seems to me that it should be a matter of public policy and, therefore, the responsibility of the Minister, and should not be left simply as a matter of day-to-day management to the Post Office managers.
  Finally, small though the point may be, it would produce a minor though significant amelioration of the financial position of the Post Office, which, is, after all, the purpose of this Bill which we are welcoming today.
  2.23 p.m.
  Mr. Kenneth Lomas: I heard both of the opening speeches from the Front Benches. They were delivered with moderation and with a full understanding of the problems which face the Post Office. When we talk of the Post Office we should realise that it is the third largest system of its kind in the world, and consequently in order to maintain its efficiency and its standard it is necessary to ensure that it has not only the best kind of staffing and manpower but the best kind of equipment. To obtain those requisites will cost money. If we can have the money we can provide the staff and equipment which are so badly and urgently needed.
  I welcome the idea put forward from my own Front Bench that there should be more debates on the Post Office. Above all the other services, the Post Office is vital. It is a communications service. It deals with people who are anxious to know, who want to receive
  1434
  a letter, who are anxious for contacts in all kinds of circumstances.
  When one thinks of the 24,000 post offices in the country one must also remember the very wide variety of services that they offer to people who go to them. In the rural areas in particular it can truthfully be said that the sub-post office or the village stores is a meeting point.
  I join with those hon. Members who have expressed gratitude to the people who operate the postal services and the telephone operators who frequently suffer irate comments from callers through no fault of their own but probably because of inadequate equipment. True, expenditure on the Post Office is high, but so it must be. Inevitably it must go higher if we are to maintain the standards that we have set ourselves.
  I want to raise two points: one on the telephone service, and the other on the postal services. I understand that the demand for telephones is 30 per cent. higher than it was last year. I understand also that the number of telephones in this country will double by 1981. I would draw attention to paragraph 36 of the Post Office Users National Council report which states:
  "One of the big handicaps which the United Kingdom telephone system has also suffered is that our telephones are underused by comparison with many other administrations throughout the world. For example, in 1971 the 'league table' for average conversations per telephone was led by Canada with 1,622—the United Kingdom came twelfth with 723·9."
  Perhaps it is not altogether the number of telephone calls which really count so much as the quality, and we might well come out top of the league in that respect.
  Nevertheless it is a sign of the times that more people are using the telephone or want telephones installed. For that reason I have wondered why there has not been an acceleration in the concept that telephone cables should be underground and laid on new housing estates at the same time as the drains, water, electricity and gas, with a connecting point outside every new house so that when someone wants a telephone installed it is a simple matter of plugging in rather than dealing with overhead wires, etc. This could be done, and it would be a long-term advantage in terms of the economic cost to the Post Office and to

  1435
  the consumer as well as in terms of the environmental problems which we face.
  I am told that the waiting list for telephones is around 220,000 and that the average waiting time for installation of a telephone is five months. We must make every effort to make a reduction there. That means that we must have more money in order to obtain the necessary equipment.
  I share the concern that if this discrimination between council house tenant and private owner is widespread the Minister should draw the attention of the Post Office to it and put it right as soon as possible. One thing that we must seek to avoid is this class system and this assumption that council house tenants are shifty and will not pay whereas those in private property are able to do so. In many cases the reverse is true.
  On the question of the installation charge, it has been said that £35 is not a lot. It is a lot of money to many people. We should try to find ways of reducing that cost and increasing the number of people who can have a telephone installed at a reduced cost. I have in mind the people who for various reasons have to live alone—people who are not chronically sick but are nevertheless sick and helpless—and need a telephone. A sum of £35 can be a very big stumbling-block indeed to having that contact with the outside world which is so essential.
  I now turn to the postal service. On a facetious note I mention the fact that all hon. Members receive the Whip by special delivery on a Friday afternoon. We all know what the business is on the Thursday, and many of us probably do not want to see the Whip in any case. Why it is necessary to send a postman on a specia ltrip to deliver the magic bit of paper that tells us how we should vote the following week is beyond me. Why cannot it be done in the usual way, perhaps coming in with the Saturday morning post? I do not see the urgency of it, and I am sure that money could be saved in this respect.
  Mr. Bidwell: It is never the case that we are told in this House how to vote: we are merely called upon to do it.
  Mr. Lomas: Also we know that many hon. Members do not obey what is on the Whip so we may as well dismiss that one.
  One of the main directions in which we could save some money in the long term is by a much greater and intensive campaign on postal codes. Huddersfield has been fortunate in having modern machinery installed in its post office, and this is an example to the whole of Yorkshire and the country. I am told that unless people use the postal codes to the full most of that machinery will become non-operative or will not be able to function as it should. Far more attention should now be given to advertising the postal codes, in schools or through other organisations, so that people will remember their codes.
  If the 630 hon. Members of this House were asked whether they knew their postal code, I bet that not more than 50 or 60 per cent. at the most would know. In the country as a whole the percentage is less than that, and in my area it is probably less than 40 per cent. If all the machinery and all the money spent on machinery is to be used to the full, it is esential that a big campaign be launched to draw people's attention to the fact that if they do not use the code their mail may be delayed and all the public money invested in the Post Office machinery will not be used. I hope that that will be done.
  The Post Office staff, whether they be postmen, sorters or on the telephone side, perform a useful and valuable service to the whole of the community. I agree with what my hon. Friends have said, that the Post Office would be more likely to be viable if it was allowed to manufacture and provide its own equipment. That would be to the advantage of all concerned.
  I give the Bill my blessing because believe that the money that is being asked for is crucial if we are to maintain and improve a service of which this country has every right to be proud.
  2.34 p.m.
  Mr. Harold Soref: We have just heard from the hon. Member for Huddersfield, West (Mr. Lomas) a most agreeable, non-controversial and

  1437
  brief speech. I fear that I shall be controversial. I fear that I may be disagreeable. However, I promise that I shall be brief.
  I was struck by the remark made by the hon. Member for Rutherglen (Mr. Gregor Mackenzie) when he expressed, with a remarkable degree of pride, his state of euphoria in joining my right hon. Friend in the Lobby last evening. I regret that I could not join them on that occasion and were there a Division called today I should not be able to join them on this matter either.
  When there is a consensus between the Government and the Opposition, as there was last evening and as there is this afternoon, the resulting views are in complete variance with public opinion. Whilst we have heard a great deal of proper sympathy for postmen, who have a very difficult job and who do it, on the whole, extremely well, I fear that there has been inadequate consideration for the consumer, who matters a great deal.
  I do not believe that I am unique in this House in having been bombarded with complaints by my constituents, individually, by the chambers of commerce and by other bodies, about the constant deterioration of the postal services, which is coincidental with the increase of costs and charges. I have bombarded my right hon. Friend and his predecessor with the letters which fill my postbag, which I know to be justified and which are increasing.
  The delay in the post and the increasing cost of the post is a constant factor. To spend vast amounts of money in research, mechanisation and technology will not necessarily improve the postal services one whit. There is a general belief that by merely spending money, particularly capital expenditure, one produces effective results.
  I do not believe that it necessarily does. It is possible that harder work, certainly greater supervision and undoubtedly more modern methods and greater efficiency in the Post Office could result in a speedier and better service.
  My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) who is no longer in his place, said that the postal service used to be vastly superior to the service today. I
  1438
  well recall before the war that there were at least five deliveries a day in London for1½d. a letter. During, the war, at the height of the blitz, the postal services were infinitely better, throughout the country than they are today. They never reached the appalling state which they have now reached.
  It is suggested by some hon. Members that possibly one postal delivery a day is adequate. I do not believe that is so, because a great deal of business, depending on export orders, necessitates our being able to compete with other countries. I happen to be engaged in export business. If one no longer receives a letter on the Friday morning—and there is no afternoon post in the City of London—one can no longer attend to an order or inquiry until the Monday, and business may be lost. I speak not only for the interests of business big and small but also on compassionate grounds. I have had endless complaints from my constituents, from people who in many cases cannot afford a telephone but who have postal communications with their friends and families about visiting them, their health and other matters, who because of the delays in the postal service are severely disadvantaged.
  I received a complaint from my local chamber of commerce about a chemist who could not get the drugs which he needed because of the delay in the post. It is the experience of every hon. Member and the majority of people in the country that we are suffering from increasing laxity in the Post Office and a failure in this House to recognise it.
  On Mondays, Tuesdays, Wednesdays and perhaps Thursdays, there are protests against inflation and rising costs, but in a thin House on Friday we are about to spend hundreds of millions of pounds writing off debts and nobody seems to care. That must have an effect on the economy of the country. I maintain that it is directly inflationary and contrary to the true interests of the country. The hon. Member for Stirling and Falkirk Burghs (Mr. Ewing), who is even more of a Luddite than I am, felt that it would be improper to have mechanisation if it meant the sacking of personnel. I do not go as far as that, but I believe that it is an illusion that by buying expensive machinery one gets a better service

  1439
  than by having individual labour and operation. Machines tend to break down. They tend to have people who do not know how to operate them, as happens with computers all day and every day. I am not sure that this vast expenditure will be worthwhile.
  I have also received complaints from constituents and I have had personal experience of delay even in the express post service. On two occasions letters posted in the House of Commons post office to my constituency with a surcharge, I believe, of 20p for express delivery, failed to arrive by first post the following day. The post has never been as bad as it is now.
  For example, the consumer is being put to a great deal of trouble by postal codes. The average writer of the letter will never put a postal code on the envelope, as hon. Members will know from their mail. People find it difficult to put SW1, Wesminster, or even London on the envelope. It is surprising that letters reach the House at all. But to make the ridiculous demand that absurd postal codes, which only an academic bureaucrat could concoct, should be used is asking for the impossible. I do not suppose that many hon. Members, least of all myself, are familiar with the postal code for their own constituencies and I do not intend to familiarise myself with them. The public feel the same because they find that if they use the code the letter does not arrive any sooner.
  I wish to deal also with the amount of money that is wasted by the postal services on advertising. Those services are unable to cope with their existing business. Letters are not delivered on time and the Post Office is unable to provide would-be subscribers with telephones. Nevertheless, quite often it wastes money advertising for more consumers.
  Mr. Golding: The Post Office does not advertise to sell telephones but to increase the calling rate, which is the basic financial problem for the telecommunications service. I should like to know of one instance of an advertisement designed to sell more telephones.
  Mr. Soref: I was not referring to telephones, but to the advertisements telling people "Your friend needs a letter"
  1440
  or words to that effect. That was the phrase used on the hoardings, and it was a complete waste of money. One of the reasons for the deterioration in the postal services is, I am told, that the men employed on them used to be ex-Servicemen of a particularly good and reliable type, but they are no longer available. It is their departure which has resulted in the vast amount of mis-sorting and the difficulty in letters being delivered on time.
  Having made a great deal of criticism, I should like to make one or two constructive suggestions.
  Mr. Charles R. Morris: Before the hon. Member finishes his attack on the postal services, can I confirm the story which he related, that if in conducting his business he did not receive a letter by the second delivery on a Friday, he was unable to deal with that business until the Monday morning? Is that the story which he is relating to the House? May I remind him that in those circumstances there would be a further delivery of mail on the Saturday morning. If the hon. Member is unable to complete his business until the Monday morning it is because the workers he employs enjoy a five-day week which is denied to postal staffs in so many cases.
  Mr. Soref: The hon. Member appears not to know that since the war the practice in the City of London has been to operate a five-day week and I know of no office in the City of London which opens for business on Saturday. Since an export business is conducted largely in the City of London it is inevitable in those circumstances that the post will not be dealt with until Monday. The same applies to other large cities.
  I was about to make one or two specific and constructive suggestions. One of them was put forward by my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), who suggested that post boxes should be situated at the garden gate, to avoid postmen having to walk up drives. That is an eminently sensible suggestion and should be applied universally.
  I believe there should also be mobile post offices. I feel very strongly about a matter which was raised by one hon. Member concerning the social necessity

  1441
  for a post office, even if it was not economically viable. I strongly support that view because I know of the number of old-age pensioners and cripples who live in remote places and who, because of the appalling and costly public transport system, are unable to reach a post office to draw their pensions. Mobile post offices would help people in that situation.
  Apart from the appalling waiting lists for telephones in my constituency and in South-West Lancashire generally, it is disgraceful that because of the computer system subscribers' names are increasingly failing to appear in telephone directories. One of the largest firms in London has told me within the last 48 hours that it has lost substantial business because its name does not appear in the telephone dirertory in spite of its being a subscriber and paying its account. Yet it has no redress. Several leading hotels in London which depend largely on telephone reservations have been similarly deprived. If the service were provided by private enterprise they would have redress, but in the present circumstances there can be none and those subscribers must suffer under the monopolistic Government telephone system.
  Another problem with the directory is that names are no longer appearing in strict alphabetical order. That presents difficulties in many cases, particularly in the London directory. Formerly in enlightened times, the exchange was given and that indicated the whereabouts of the subscriber. There is now a series of ridiculous postal codes and digits which no one understands. Also, "Harry" does not necessarily precede "Herbert" and that is contrary to the public interest. If the Post Office paid more time and attention to the consumers' interests by the simplification of certain matters a great deal of good would be done.
  That is typified in the time-wasting new telephone system that we have in the House. It was installed, I believe, at a cost of £500,000 and yet it costs more money and time to operate. We are supposed to carry around with us a ridiculous book of telephone extension numbers instead of asking the operator for an extension. In the end I believe the telephonists will have to be brought back to work the system because no one else will bother with it.
  1442
  Hull has a privately-owned telephone system which runs at a profit. The Government should consider the possibility and desirability of extending that system, so that instead of the taxpayer having to spend money to provide more lines and write off debts, those who finance the telephone system could do it themselves. Such a proposal would help in the struggle against increasing costs and mounting inflation which I believe to be endemic in the Bill.
  I have a personal interest in the Giro in that it abuts my constituency. Here, too, there is a social consideration. It is an area of high unemployment. Ideologically, I am a capitalist and I believe in capitalism, but I also believe that if there is a possibility of high unemployment in an area, if people are thrown on the dole without an alternative form of work, that is not a fair situation, and I cannot support it.
  It would be different if the economy were in a different state, but in present circumstances I believe that Giro should continue. However, there should be modifications. I am told that there are too many bosses and too many executives and not enough people working in the lower grades of that institution, and that may well be true.
  Above all, by passing the Bill we shall he putting up prices again and worsening inflation. The Government should have set an example, but they are not doing so.
  2.51 p.m.
  Mr. William Molloy: After that speech, the House will be fully aware of the deep concern felt by the hon. Member for Ormskirk (Mr. Soref) about Post Office matters, most of which are beyond his comprehension. Most of his criticisms of the Post Office could be laid at the door of the private enterprise organisations supplying equipment to the Post Office. I make him a fair challenge—let him engage in a public debate with me outside the House about some of those criticisms.
  I am tempted to comment on the speech of the hon. Member for Derbyshire, South-East (Mr. Rost), but time will not allow me to do so. Suffice it to say that I congratulate him on the consistency of his attitude, which is to know the price of everything and the value of nothing.

  1443
  This has been a week of remarkable conversions. In fairness to the Minister, I should say that when he was appointed to the job, and to his previous appointment, it seemed to me that it was not only because he had some knowledge of the publicly owned industries but because they were anathema to him. That attitude has changed miraculously, as he demonstrated in his welcome speech today. That was another of the great conversions. And hon. Members opposite supported what the Minister said about the publicly owned industries. The conversions among hon. Members opposite have not been matched since a Chinese general baptised his troops with a hosepipe.
  I join with those who have congratulated Post Office staff of all grades. During the short time that I was a member of that staff, along with my right hon. Friend the Member for Wednesbury (Mr. Stonehouse), one of the things that struck me was that the people in that great organisation felt that they were part of it. They were concerned about it and proud of it. They achieved remarkable things. Sometimes they were irritated when they thought that they were not given a fair crack of the whip.
  My hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) said that we did not have many debates on this subject. In an intervention in the speech of the hon. Member for Hampstead (Mr. Geoffrey Finsberg) I recalled an occasion when, in reply to a Question, the Minister told me that it was a matter for the Post Office. My hon. Friend the Member for Southall (Mr. Bidwell) suggested that there could be too much debate in the House about the publicly owned industries because, he said, ordinary working people would start asking unnecessary questions. I do not agree.
  Mr. Bidwell: I hope that I did not convey that. I was talking about getting down to details such as shifting a telephone kiosk a few yards along a road. Such details ought not to be discussed in the House. I should welcome wide-ranging debates.
  Mr. Molloy: I am grateful for that explanation. I do not think that ordin-
  1444
  ary British people would behave like that. In any case, if it is wrong to move a telephone kiosk a number of yards and no one in the bureaucratic set-up is prepared to do anything about it, I should be surprised if my hon. Friend did not take up the matter himself. I know how frustrated he would be if the Minister said that it was a matter for the Post Office.
  I prefer Nye Bevan's philosophy, that the quicker we enlarged the representation of the great publicly owned industries and had Ministers in the House accountable to us for their day-to-day running, the better. It is the only way in which to provide a sour to greater efficiency. I do not think that ordinary British people would be silly enough to bombard us with futile questions.
  The Minister and my hon. Friend the Member for Rutherglen mentioned writing off the debts. Both might have been a little fairer and mentioned the social contribution of the wide variety of activities of the Post Office. There is plainly a need for new equipment on a massive scale, and what we are discussing is a vital link in the nation's communications. The key to the problem is the investment programme and the Minister must defend that to the last. In doing so he will be defending not merely his own Department, but a vital link in the commercial, industrial and social life of the nation.
  We ought not to be too pessimistic about the performance of the Post Office. According to "World's Telephones", on 1st January, 1971, Great Britain had a greater telephone penetration than any of the countries of the EEC, which we are about to join. What is remarkable is that one of the countries above us in that league is Norway. Let us not be too despondent about the performance of the Post Office. Although it has been starved of appropriate funds over the decades, it has had a remarkably beneficial effect on the lives of ordinary people.
  The hon. Member for Ormskirk instanced how the non-delivery of a letter could seriously damage a major part of industry. If that does not show the importance of the Post Office, nothing will. What I cannot understand is why the hon. Gentleman is not therefore

  1445
  fully supporting his right hon. Friend in the provision of money to make the Post Office even more efficient, and ensuring that the money is properly spent by seeing that the Post Office is fully accountable to the House, as every other publicly owned industry should be.
  I agree that much more money should he allocated to this great undertaking. I also agree that the money must be wisely invested. However, I feel that it would be much better that the affairs of such great public undertakings as the Post Office should be fully debated in the House of Commons. This would help to clear much of the irritation that exists in the trade unions which serve the Post Office. The Union of Post Office Workers and the Post Office Engineering Union know all about the great part played by their industry in the nation's affairs. Nothing irritates them more than when approbrium for inefficiency is directed at the Post Office in general when that criticism should be more appropriately directed to the private firms who fail to deliver on time equipment which has been ordered.
  Mr. Soref: Rubbish.
  Mr. Molloy: The hon. Gentleman cries "Rubbish". I should tell him that I believe that we should look closely at how much equipment used by the Post Office can be produced within the Post Office organisation. I hope that the Minister will consider setting up a specialist sub-committee to consider exactly this proposition.
  A number of hon. Members have mentioned a shared service. The figure is now running at almost two million. An analysis of the situation shows that the fault lies primarily not with those involved in the Post Office, from the chairman downwards, but with private enterprise. Incidentally, we are always told that the Post Office cannot answer back, but it surely can find ways in which to do so. Why does not the Post Office make more public the fact that it is constantly irritated and held back in its operations because private enterprise has failed to supply equipment ordered by the Post Office? If it were to make the facts public, I believe that this would lead to a shrinking of the shared service and a decrease in the size of waiting
  1446
  lists. I have been informed that much of the reason for delay lies in the fact that the Post Office is awaiting the delivery of exchange equipment. If the Post Office had more of a voice in its production, this would improve efficiency and speed up the whole process.
  Mr. Soref: How does the hon. Gentleman account for the fact that in the past letters which bore a stamp of 1½d. reached their destination the following morning, whereas in these days when thousands of millions of pounds have been spent on the service there is no guarantee that they will ever reach their destination.
  Mr. Molloy: We all know that the whole service was much cheaper between the wars. When 4 million people were unemployed, they could not afford to write letters. Because of the decision taken by the nation in 1945 we increased our living standards and this led to much more pressure on the Post Office—as, indeed, it has led to pressure on the electricity industry in coping with all the washing machines, television sets and all the rest. The whole process of pressure has resulted from the increasing prosperity of the nation which has been shared by more and more people.
  I wish to make a plea on behalf of the old-age pensioners, the disabled and the housebound. It would surely raise the status of the Post Office and catch the public's imagination—because we all know that the public is desperately concerned about these categories of people—if we could take a leaf out of the book of courage which was pursued so successfully in the immediate post-war years. If Aneurin Bevan had paid heed to the Jeremiahs in 1947 when launching the National Health Service, if he had been swayed by all the speeches in the House of Commons about how expensive and impossible such a service would be, nothing at all would have been done. He disregarded them and went ahead.
  In the same way, when this proposition is put to successive Ministers, they will trot out the figures of cost, the complications involved, and so on. The Minister can make a name for himself if he is prepared in the near future to organise a scheme to ensure that the housebound and the old in our society, who know that

  1447
  they have only a few more years to live, have the pleasure and security of having telephones in their homes. In this connection, I pay tribute to the Post Office Engineering Union whose members have given their services free of charge to those local authorities which are trying to provide free telephones for the sick, the disabled and the pensioners in their boroughs.
  Having listened to all the speeches in the course of this debate, there is a great deal more that I would like to say. However I understand that both Front Bench spokesmen have a great many points with which to deal. But before I sit down I want to draw the Minister's attention, in connection with my proposition to give old-age pensioners free telephones, to an incident in the 1960s when the Post Office Engineering Union announced that its members were prepared to work for nothing more than the satisfaction that it gave them as trade unionists to supply hospital trolley telephones free in all Britain's hospitals. All sorts of reasons were advanced why they should not do it. Insurance problems were raised and goodness knows what else. In the end, the objections were brushed aside and the job was done.
  I hope that I shall succeed in persuading the Minister to carry out an examination in depth of the feasibility of making a gesture of good will to old people who have made their contribution to the society in which we live, and who could not enjoy it when they were young and middle aged, by ensuring that none of them shall be totally alone. We could do that by giving them some means of communication via the telephone. It would create an immense amount of good will. We have the means in the Ministry of Posts and Telecommunications to improve all that is involved in commerce and industry. What is equally important, we have the means to improve the quality of life for the mass of ordinary people.
  Putting the two together, one has the perfect reason why nothing should be withheld from the Post Office. It contributes to industry. Hon. Gentlemen opposite have given examples of letters that have been delivered late and of what those late deliveries have cost industry. That is one side of the coin. There may have been good reasons for the late
  1448
  deliveries. The postman may have been involved in an accident. Any one of a number of reasons may cause a late delivery. On the other side of the coin we have a great many old-age pensioners, chronically sick and disabled people who need the comfort of knowing that they are not alone in an emergency. They need the means of making contact. What is more, a telephone could be used not only for emergencies but for the encouragement of someone who is sick, poor or elderly to talk to someone else and so cheer his day.
  If it were once appreciated just how big a contribution the Ministry could make to commerce and industry and also to the social side of the equation, people would not begrudge the Post Office one halfpenny in its endeavour to achieve the best in all its activities.
  3.5 p.m.
  Mr. Charles R. Morris: I am deeply conscious of the privilege which has been afforded to me by my parliamentary colleagues of speaking from this Dispatch Box on the achievements and problems of a great public industry and service with which I have been associated over so many years.
  Against this background it would not be inappropriate to start by echoing the appreciation which has been expressed by hon. Members on both sides of the House of the contribution made by those who provide the nation's telecommunications and postal services.
  I now turn to the substance of the debate and, indeed, the Bill itself. No one disputes the seriousness of the financial position now facing the Post Office Corporation—an envisaged write-off of £190 million with the ominous threat of another tariff increase early next year. It is almost as if the 4p or 5p post is looming on the horizon.
  I accept that accumulated deficits, the burden of loan interest payments, ministerial directions, Government policies, the current high rate of inflation and what I term consumer convenience have contributed to the financial dilemma now facing the corporation.
  Consumer convenience is to some extent emerging as a major influence that is producing a contraction in the use of

  1449
  postal services and an almost insatiable demand for telephone installations at one and the same time. It is understandable that the users of our postal services should manifest the same behaviour patterns as customers of other large business undertakings. They tend to buy convenience. Instead of sitting down to write a letter, a user understandably prefers to pick up a telephone and talk direct to the person concerned. This I believe is influencing the contraction that is now emerging the figures—of the use of postal services which has taken place in recent years. Equally, ministerial decisions on proposals which have been submitted by the Post Office Corporation from time to time have made their contribution to the situation now facing the corporation.
  I can understand the concern expressed by the Chairman of the Post Office Corporation last week at his Press conference regarding the current rate of inflation and its effect on Post Office finances, but I suggest that he approaches any discussions he might have with the Minister on the topic of inflation with a due sense of caution. I say that not because of any disrespect for the Minister but because of a speech that he made to the Tory Party faithful in Nottingham on 25th May last. With an immodesty which I accept was completely out of character he said:
  "The cure for inflation is easy."
  It makes one wonder what justified the burning of all that midnight oil at No. 10 Downing Street, and why the CBI, Mr. Feather, the TUC and the Government expended so much energy on trying to find a solution to the problem.
  The Minister said on that occasion in Nottingham:
  "We must knock inflation on the head."
  He made it sound like a Bournemouth burglar on a night out. He told his audience:
  "We must knock inflation on the head. We can do it all right. We can do it easily if only there could be a voluntary embargo on the self-deafeating idiocy of excessive wage claims."
  If that is the Minister's view, I wish he adopts a slightly more balanced approach in dealing with the problems to which inflation is giving rise in the Post Office.
  I wonder whether the Minister is unaware that Post Office staff come up against the same problems as other people
  1450
  do when they want to buy houses at a time of land and house price inflation? As for excessive wage claims, there is no evidence to support the contention that my former colleagues in the Post Office have enjoyed excessive wage claims. Instead of making speeches like that, the Minister might usefully direct his energies, his inventive skills and his imagination to dealing with some of the major problems besetting the department for which he has ministerial responsibility.
  Is the Minister as euphoric as he sounded this morning about the spread of investment as shown in the delightful brochure prepared by the Post Office Corporation? I should not wish to see a diminution in the sum of £4,000 million which it is envisaged will be spent on expanding telephone and telecommunications services over the next five years, but I seriously question whether £44 million for mechanising the work in postal sorting offices is sufficient. As the Minister knows, the Post Office has concentrated letter sorting on 130 offices and has introduced the postal codes to which reference has been made by many hon. Members today. It was explained when postal codes were introduced that one of their main purposes was to facilitate mechanical sorting of letters, but the tragedy is that less than 10 per cent. of the 130 designated sorting offices have been mechanised. At this rate, the corporation and the nation will end up paying for yesterday's mechanisation at tomorrow's prices.
  There is an added incentive for greater urgency here. If we are to have the more intensive marketing that so many hon. Members have called for and succeed in generating increased traffic, without mechanisation, the Post Office will not be able to derive the financial advantage which we would all wish to see.
  The hon. Member for Derbyshire, South-East (Mr. Rost) talked of the corporation needing more dynamic marketing techniques. Some of my hon. Friends have said much the same thing. It has been a constantly recurring theme over the years. My only regret is that, as on so many other issues, the promise has never matched the achievement.
  As long ago as October, 1965, a departmental study group on long-term planning for the postal service recommended

  1451
  that a high priority be given to the adoption of a "positive marketing policy". Bearing in mind the importance which the group attached to this recommendation, the country is entitled to know why there has been so little progress in identifying new profitable services that the Post Office could provide. One might have hoped that this would have followed that recommendation.
  Sadly, successive Post Office annual reports have hardly demonstrated any enthusiastic rush to identify such services. Five years later, in 1970, the Post Office reported that it had begun to study the marketing opportunities which, it was felt, the new corporation's status would provide. In 1971, the following year, that section of the annual report dealing with marketing started with the hardly original observation that
  "the financial situation at the beginning of the financial year further emphasised the need for a dynamic marketing operation."
  That is a constantly recurring theme. This year the subject of marketing was discussed in a mere two paragraphs with the comforting assurance that a new marketing department is developing realistic marketing plans for arresting the decline in postal business. My only comment is that it will have the good wishes of everyone in its appointed task. I acknowledge that it has made real advances, particularly in the North-West, in encouraging contracts, some with mail order businesses, for the bulk handling of parcel traffic. But I should like to see more emphasis placed on identifying new services.
  We have had indications now that there will be centralisation of vehicle licence issuing, and that under the new Government system of tax credits the business on post office counters is likely to contract. This is added justification for the Post Office Corporation identifying these new services.
  We have had seven years when all those who are vitally interested in furthering the interest of the Post Office have analysed and accepted the need for improved marketing techniques. We have had seven years of constant reiteration of the importance to the Post Office of marketing. Incidentally, it is seven months to the day since the present
  1452
  Minister assumed his responsibilities. Let us now see some action on improving marketing techniques.
  I should like to highlight a number of other issues affecting the services provided by the corporation. Whatever happened to the Freight Integration Council? Whatever happened about rationalising parcel traffic between the Post Office, British Road Services, the National Freight Corporation and the Public Transport Authority parcel-carrying services? I accept the view expressed today about the need for a sensible rationalisation of these parcel-carrying services. There is a lack of urgency in dealing with this problem. This competition in loss-making must be halted at an early stage. The Minister should seek to exercise his initiatives in this matter.
  I now comment on the reference made by hon. Members on both sides of the House to the Post Office Giro system of banking and transfer of credits. I congratulate the Minister on the political courage he has demonstrated on a number of occasions in withstanding criticism by his parliamentary colleagues, including the hon. Member for Derbyshire, South-East who was at least honest today when he said that he was in favour of hiving off the Giro system. The political courage the Minister has demonstrated on this issue has encouraged everyone who believes that this system meets a community need. We should be encouraged even further if the Minister were to use his influence to persuade his ministerial colleagues to direct their Departments to use the service. If the Government believe that the service meets a community need, they can give a lead by directing Departments to use the service.
  My hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) said that this is the first opportunity we have had in 2½ years to debate the Annual Report and accounts of the Post Office and the Post Office Corporation. I would add that nor have we had an opportunity to debate the splendid work which has been done by the Post Office National Users Council.
  I join in the tribute paid by the hon. Member for Hampstead (Mr. Geoffrey Finsberg) to the Users Council's distinguished chairman, Lord Peddie. The chairman and the Users Council

  1453
  have demonstrated a determined and diligent independence. However, there is need for a closer working relationship between the users council and the corporation. I shared the users council's views on tariff increases and on the proposals for restructuring the postal services, but we are entitled to question the situation in which the corporation puts forward proposals that cause anxiety amongst the public and the Post Office staff, which are then slashed and, as some may think, savaged by the users council. Is it not possible for the corporation and the users council to work more closely together in the consideration of such proposals? Is it not possible for the corporation to take the users council into its confidence at a much earlier stage? That would benefit the corporation, the public and the users council.
  Turning to telecommunications, I emphasise the need to press on with clearing the waiting lists for telephones and encouraging the increasing calling rate of residential subscribers. I am mindful of the signal contribution the Prime Minister has made to increasing the calling rate by his institution of the "dial a diddle" system in relation to price increases during the period of the 150-day freeze. I do not know whether this system will reduce prices, but it will increase the calling rate for residential subscribers; and on that basis I welcome it.
  As for the Minister's impending decision on the TXE 4 system of telephone equipment, may I re-emphasise the point made by my hon. Friend the Member for Rutherglen that this decision will have a profound consequence on the development and structure of the telecommunications system in this country to the 1980s and beyond. No one would wish to see a rush decision, and the Minister will have the support of this side of the House in resisting any commercial pressures to which he may be subjected.
  We on this side of the House welcome this Bill. Nevertheless, we shall be scrutinising it in detail in Committee. Today's debate has concerned itself with the achievement and problems of Britain's postal and telecommunications industry. Despite its critics, I believe that it still bears favourable comparison with any
  1454
  other comparable system in any part of the world. I believe it is an industry with an exciting future and with a high growth potential. It seeks to meet a great community need and it can do a lot to help the people to whom my hon. Friend the Member for Ealing, North (Mr. Molloy) referred. I was impressed with the compassionate and eloquent plea that he made on behalf of the disabled and socially deprived in the community. I am conscious that the Post Office is anxious to meet the needs of the population.
  Finally I ask the Minister to shake off the ministerial monastic silence which he appears to have observed, at least so far as his departmental responsibilities are concerned? Looking through the records, he seems to have made few, if any, speeches referring to the Post Office during the months that he has held ministerial responsibility for this Department. Will he speak out and encourage the dedicated and loyal staff who serve the nation in this industry? Let him put the problems of the Post Office Corporation for which he is responsible to the nation. Let him go out and meet the people who provide this service. Let him go into the telephone exchanges and sorting offices and let him talk to the engineering and postal staffs. I am sure he will find it advantageous to himself, the staffs and the public they seek to serve.
  3.38 p.m.
  Sir J. Eden: If I may have the leave of the House to speak again, Mr. Deputy Speaker—[HON. MEMBERS: "Hear, hear."] I am grateful to hon. Members.
  First, I warmly welcome the hon. Member for Manchester, Openshaw (Mr. Charles R. Morris) in his leap from the PPS bench to the Dispatch Box. Now that he has moved to the front, I am sure hon. Members who have heard him will agree that he has not wasted the time he has had to study his master from behind.
  Like his hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie), who opened for the Opposition so amiably, the hon. Member asked for more debates; at least, he asked for more speeches from myself on Post Office affairs. I should welcome more debates. We have several opportunities to consider Post Office matters. The report and accounts of the Post Office are presented

  1455
  to the House, but it has never so far been the custom—I am not saying that it should always be done in this way—that they should automatically form the subject of an annual debate.
  My hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) suggested that the Report of the Post Office Users National Council should be discussed at the same time. These are extremely valuable reports, and I take this opportunity of saying how much I welcomed my hon. Friend's contribution and how grateful we are for the work of the users council under the chairmanship of Lord Peddie. Very appropriately, my hon. Friend paid a tribute to his chairman. I do not know whether that means that he moves up in the hierarchy of the users council, but I readily acknowledge that the tribute was well deserved, and I know, also, that it is recognised as such by all users of the services of the Post Office.
  If the House wishes to have further debates on these matters, the question can be discussed through the usual channels. All I emphasise is that I should not resist it. Indeed, I should welcome it.
  In response to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), I should say that, even though we have not had much chance to discuss Post Office affairs, and even though I am bringing forward a Bill which calls for substantial borrowing powers, I am not asking Parliament to sign a blank cheque for the next two years. Far from it. As I explained in opening, I am responsible to the House for the exercise of my duty, and under the Post Office Act I have to approve the annual investment programmes of the Post Office. As my hon. Friend knows, it is customary in the case of the Post Office and other nationalised industries for the results to be communicated to the House in the form of the annual White Paper on Public Expenditure. I recognise that that is a general occasion, but it invariably gives rise to debates.
  There are probably three or four layers of parliamentary control and accountability. First, Parliament will enact this legislation. Second, Parliament will be asked to approve the extension of
  1456
  borrowing powers under the legislation whenever that moment arrives—in about two years, I should imagine. Third, there may he debates on the annual reports or on other occasions on Post Office affairs generally. Fourth, I am in any event continuously accountable to the House for the exercise of my statutory powers and for scrutiny and approval of the Post Office general investment programme.
  During the debate, an enormous number of matters have been raised. I shall do my best to answer as many as I can, and my speech will inevitably be a little fragmented in consequence. I listened carefully to what was said by the hon. Member for Southall (Mr. Bidwell) about his constituency difficulties. He certainly made the most of the opportunity which this debate provided. I understand that the Post Office Users National Council has taken up his complaint with the Post Office and has not reached any final view on the merits of that case.
  On the more general issue, I assure the hon. Member for Southall and other hon. Members that it is not the intention of the Post Office to launch into any large-scale reduction in the number of sub-offices now serving the country so well. Moreover, no decision is taken about any office without full consultation with local interests.
  I come now to the request expressed by several hon. Members on both sides regarding cheap telephones for the aged or special services for elderly people or elderly and disabled people. I fully appreciate the points which were made, and I am sure that they will be studied by the Post Office. The recognised welfare agencies may give help towards the cost of the telephone in needy cases. I think that that is where the matter should lie. We should run into terrible difficulty if we expected the Post Office to arbitrate between claims or to vary the level of its charges in matters of this kind. I am sure that it is best and most properly handled by the welfare agencies. There are provisions in the Chronically Sick and Disabled Persons Act, 1970, which would enable local authorities also to provide special help in certain circumstances. I will not detail them because I am sure that hon. Members are familiar with them.

  1457
  Recently and exceptionally, and I pay tribute to it, in response to a voluntary scheme set up by the Post Office Engineering Union, the Post Office has agreed to reduce the connection charge by 50 per cent. where telephones are supplied to elderly people by local authorities and installed by Post Office engineers working without pay in their spare time. This is a very practical and worthwhile scheme and an example of the sense of service which it is recognised exists among all the employees of the Post Office Corporation.
  As to separately identifying all the work done for elderly people and—if I may so put it for "shorthand" purposes and without meaning in the least to be offensive—categories of that kind, I acknowledge the force of what hon. Members have said, but it must be recognised that the postal service operates as an integrated system and cannot easily or sensibly be chopped into parts which justify a grant or subsidy and parts which do not. That would present considerable complications, and it is far better to concentrate on making the overall system viable.
  A number of hon. Members, and notably my hon. Friend the Member for Oxford (Mr. Woodhouse), asked about the postal codes system, about which my hon. Friend the Member for Ormskirk (Mr. Soref) and other hon. Members had something to say. I took note of what the hon. Member for Openshaw regards as the slowness of implementation towards mechanisation which will help make the postal code system worth while. So far, automatic letter sorting machines have been installed in 13 offices, and at least five more will receive them in the next 12 months. The country will be fully coded by April, 1973.
  Public response to these codes still varies from place to place; from 61 per cent., I gather, in Croydon, to 11 per cent. in the constituency of my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). However, it tends to improve steadily with increasing familiarity, and as the system goes forward I am sure that the public will come to recognise that it is designed to speed the mail and improve customer service.
  I emphasise that there is no question of starving the posts of capital. Planned
  1458
  investment amounts to £190 million over the next four years, or £252 million over five years, and these are substantial sums by any standards. There are limits to what can be done to mechanise such services as collection and delivery, so that efforts are very properly being concentrated on modernising old buildings as part of a properly phased comprehensive programme of bringing technological advances to bear in the sorting offices, where they will do most good.
  A number of my hon. Friends touched on various aspects of the monopoly situation of the Post Office and, as I think, properly pressed me to encourage more private enterprise effort, particularly on the periphery. As the House will know, following discussions with the Post Office and industry, my right hon. Friend the present Minister for Industrial Development announced in June, 1971, a number of measures to liberalise the supply by private industry of customer apparatus for use in conjunction with the telephone system. This has led to a substantial increase in the number of products—now over 400 items—being marketed by private firms for attachment to public telephone lines.
  But it must be borne in mind that the telephone in the home can never be treated like the gas fire, which receives gas through the pipeline and, hopefully, there it stays in the home and is used as called for. The telephone system works two ways—speech travels in two directions—and involves substantial additional complications which, in view of his line of argument, I am sure my hon. Friend the Member for Hampstead will recognise.
  My hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), in his reference to Giro, properly emphasised that some of the troubles experienced by it were due to bad forward planning in the past. We have had this argument, and I hope it is now behind us. We have taken the decision to authorise Giro to proceed, and, as I pointed out in reply to a Parliamentary Question on Wednesday, it has been making considerable progress in the right direction.
  The hon. Member for Rutherglen was back on his favourite hobby horse. He has pressed me on the subject before, and I shall now try to give him up-to-date statistics about the extent to which

  1459
  Giro handles Government business. It already handles Government business with a cash flow in excess of £1,200 million a year, and about 30 per cent. of that total has been obtained since the Government announced that the system should continue. That is the positive action we have taken to encourage those who are engaged in the work.
  Government Departments also make available facilities for staff to receive their pay by Giro cheque or by credit to their Giro account. That business is at present worth well over £100 million in cash flow terms. So there is no need for those who manage Giro to feel that there is any lack of encouragement for their endeavours.
  I do not see how value added tax, which is to be charged by both inputs and outputs, could have any effect on the vast programme of investment for the telecommunications business that we have been discussing today. For posts, which benefit from being an exempt service, the cost of equipment will be increased slightly whereas that of the labour saved would not. Cost reduction schemes obviously involve some manpower savings, and these should be sufficient to offset this factor. Although therefore, there is some possibility that it could have some effect on the investment plans of the Post Office services, I believe the practical likelihood of this occurring is virtually nil.
  A number of my hon. Friends asked about certain aspects of the pattern of the corporation's borrowings. The overwhelming proportion of the Post Office's debt—over 99 per cent. of it—consists of loans from the National Loans Fund. These are used to finance the Post Office's capital investment programme, the balance being provided from internally generated funds. In accordance with the provisions of the Post Office Act, the Post Office also borrows from other sources such as overseas bankers and the Bank of England. At 31st March this year borrowings from overseas amounted to the equivalent of £9,500,000.
  Overall we are certainly not starving the Post Office of capital, whatever may have happened in the past. I am concerned with the future needs of this great public service. It is not particularly helpful at this stage to seek to apportion
  1460
  blame—I mean not as between parties but as between industry on the one hand and the Post Office on the other, or anything of that kind. The lead time for a large telephone exchange could be as much as six years, so we are dealing with a big time scale and big money. I am encouraged that industry and the Post Office with the various Government Departments concerned are getting together much more closely and much more constructively to work towards sensible investment decisions for the benefit of customers in the future.
  No matter how present trends of costs and prices continue, it is clear that we shall need between £400 and £500 million a year. The Government's policies to combat inflation are expected to operate on both prices and costs. They will affect both sides of the equation, and, therefore, we have no reason to modify the estimate that some £2,000 million will be needed in the next year and the following four years.
  On the other hand, if there has been an over-estimate or an under-estimate of the amount required, it will mean only that the next borrowing powers Bill would be required a few months later or earlier. I assure the House that current proposals for restraint of prices and costs do not imply any curtailment of the investment plans of the Post Office. The Post Office is expected to conform with the Government's measures for combating inflation during and after the 90 days.
  I said earlier that the financial objectives for the businesses for the period beginning next April were due to be reviewed towards the end of this financial year in the light of anti-inflationary measures and policies. I do not know now whether it will be right to continue with the present 10 per cent. and 2 per cent. figures to which reference has been made. It must depend on the performance of the businesses and what will be required of them by the Government in the area of prices. The future course of telephone charges and the level of self-financing achieved by the telecommunications business are bound up with the financial objectives to be set as a direct rate of return on capital. I emphasise that the investment plans which have been put before the House today are every bit as much intended to help the Post Office to contain costs as to improve the quality

  1461
  of service, and I hope that that will reassure some of my hon. Friends, whose doubts on these matters I fully understand and recognise.
  New technologies can contribute very substantially to keeping rising costs in check. These proposals are also geared to a productivity improvement in output per employee expected to be of the order of 7 per cent. The Post Office booklet envisages some increase in charges if the present trends of cost inflation persist, but it is our intention that the present trend of cost inflation shall not persist. That is why the additional measures are before Parliament now.
  I hope that hon. Members will recognise the necessity of the Post Office having the powers for which I am calling in the Bill. These powers are designed to bring improved services to customers of the Post Office Corporation. They will be carefully monitored and controlled by the form of parliamentary scrutiny that I have described. I hope, therefore, that the House will agree to give the Bill a Second Reading.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

POST OFFICE (BORROWING) [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present Session to increase the statutory limits on the indebtedness of the Post Office and partially to release it from its liability to repay capital debt, it is expedient to authorise—

(1) any increase in the sums falling to be paid out of or into the National Loans Fund or the Consolidated Fund in consequence of any provision of the said Act of the present Session increasing the limit on the indebtedness of the Post Office in section 36(2) of the Post Office Act 1969 to £4,800 million;

(2) the release of the Post Office from its liability to repay an amount not exceeding £200 million in respect of the principal of debts assumed by it under section 33(1) of the Past Office Act 1969 or incurred by it before 1st April 1973 under section 35(2) of that Act.—[Sir J. Eden.]

NOTICES OF MOTIONS, AMENDMENTS AND QUESTIONS
Ordered,
That this Session—

(a) a notice of a question, or of an Amendment to a Motion standing on the Paper for which no day has been fixed or of the addition of a name in support of such a Motion or Amendment, which is given after half-past Ten o'clock in the evening shall be treated for all purposes as if it were a notice handed in after the rising of the House; and

(b) the proviso contained in paragraph (4) of Standing Order No. 8 (Questions to Members) shall not apply.—[Mr. Pym.]

ADJOURNMENT
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Weatherill.]

HOUSING (YOUNG PURCHASERS)
3.58 p.m.
Mr. Hugh Dykes: I am grateful for the opportunity of raising today, on the Adjournment, a subject which, despite the rapidly emptying character of the Chamber, is of acute concern to Members in this House, to Members in the other place and also to the public outside. It is the specific subject of young married couples buying their first home, be it a flat or a house, within the context of the anxiety that has been shown in the country at the rate of rise of house prices and house values in recent times, and particularly during the last 12 months.
During public business today we debated a vast public enterprise, the Post Office. In this Adjournment debate we have the opportunity to consider an enterprise which, in its totality throughout the country, is public, is private and is intensely personal to the people whom I have in mind. I raise the matter partly in the geographical context of the South-East, and perhaps the Greater London area in particular, and partly as a national matter, because I believe that airing this subject now is a sagacious move on the part of the House. Therefore, I appreciate the opportunity to raise this matter this afternoon in this short debate—
It being Four o'clock, Motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Weatherill.]
Mr. Dykes: The present is a suitable time at which to consider this subject because there has been, at least temporarily, a welcome respite since the heat has been taken out of the rise in house prices. The Government should be congratulated on policies which have been partially responsible for this improvement. I must not be led into a treatise on the subject of inflation because I know that it would be unwelcome to the House, but I must stress the danger of accepting any situation which regards the present situation of house prices as satisfactory. Therefore, I should like the Minister to consider the longer-term fundamental ideas of easing the lot of the young married couples who are seeking to purchase their first home.
When we look back at the enormous boom in house values—and this is not only confined to London; it is found in the South-East generally and certainly in most large cities and conurbations—we must all be acutely concerned to see in what way we can assist those who seek to purchase a home and face enormous difficulties.
I could give a great many statistics to reinforce what I am saying, but let it suffice to say that a quarter of all those receiving mortgages are earning under £30 a week. This is in one way a remarkable testimony to the basic underlying health and success of the drive to home ownership for everybody, which is to be welcomed. However, statistics tend to deal in averages, and perhaps in terms of hardship are misleading.
We might perhaps examine the parameters of average income in areas which are expensive in terms of house values and may cause particular difficulty to young married people seeking to buy a house or flat. Home ownership for every married couple is part of Conservative philosophy; it has been hacked by the Government and is accepted as a desirable social end in itself. I am not seeking to criticise the Government in this debate, and I have been distressed that most of the factors which have caused a rise in house prices have been quite outside Government control.
It is distressing to see young married couples not merely in a state of mild frustration but in a state of savage desperation and acute frenzy because any possibility of purchasing their first property has been denied to them by the
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harsh economic realities of the rise in house values.
To take another specific example, though statistics on these matters inevitably are imprecise and amateurish, it is fair to say that in the inner London area the price of a reasonably small flat is about £8,000 or £9,000. If a young couple are thinking in terms of a small house in inner London the minimum price nowadays will be £10,000 or £11,000. In the outer London boroughs a semidetached house or even a modern flat in a newly developed block which is comfortable but small and modest in size will cost about £9,000, £10,000 or £11,000.
Again taking an imperfect statistic—here the figures are even less reliable—a young couple engaged to be married, or recently married, and working in London will be earning on average between £2,000 and £2,300. That is considerably above the national average for people in that category, but it is commensurate as a figure with the higher cost of living in a capital city like London and some of our provincial cities.
It is axiomatic under the existing rules applying to building society loans, despite the obvious tribute that I pay to the success of the building society movement and the way in which it has tried to ease its rules in recent years to make matters easier for house purchases, that couples with that kind of income are unable to purchase even small properties because of the economic realities of the inflation in house values and the fact that the market in house prices unfortunately is made not by the bulk of people below the age of 30 who wish to buy their first properties but by those in older age groups with higher incomes who dominate the market in our free society. No one will criticise the fundamentals of that, but we do criticise the harsh effects of this kind of economic reality.
In that framework, it will be extremely useful if my hon. Friend is willing to consider a number of proposals that I wish to make, not in any hard and fast way but in a way which might go a considerable distance to solving the problem. What is more, it will be greatly appreciated if my hon. Friend has time to develop the Government's latest thinking on easing the problem.
Before doing that, however, I want to return to examples that have come

1465
to my notice. I do not have the time to go into them in detail, and there is no doubt that beyond my own constituency there are many other examples, some of which were enunciated in yesterday's Evening News article about a specific couple facing this kind of difficulty.
We have a situation where even young people on average incomes in a big city like London cannot become the owner-occupiers of even modest properties as matters stand. These are not young married couples with incomes well below the average who are desperately poor and face the problems of bringing up children; they are newly married people earning normal incomes in London.
As a community and to some extent as a Government, we have to look towards institutional ways of easing the problem. If we do not, I feel that the social consequences, let alone the economic ones, will be extremely grave for the future. I hope, therefore, that the Minister will have time to respond to several points that I wish to make.
I believe that the building societies' operational rules could be eased substantially more. Again, I pay tribute to them, but I believe that more can be done regarding the length of repayment periods and by way of special rates of interest for young married couples—of course, they have to be married, so that no fiddling can go on in any future special schemes.
I believe that a lot of value would emerge from a joint Department of the Environment/Building Society Association study of the problem in a detailed way, at the end producing a report.
I should like more consideration given to official assistance which may be provided for deposits. I am sure we would all be delighted to see mortgages which go closer to the 100 per cent. ratio. Even so, the building societies use their own valuations, so mortgages normally do not represent the 100 per cent. purchase price of a house. I should like to see mortgage percentages going up to 100 per cent. combined with deposit assistance of one kind or another. To some extent, this could depend on the purchaser's propensities and ability to pay and whether savings had been possible.
1466
A young married couple in my constituency—all credit to them—had saved about £1,500 to purchase a property worth about£10,500—again a modest price nowadays in London. Yet the price kept going away from them in the boom period, despite having saved well above the average for a deposit, even in the London area, through private savings. This was a tremendous personal achievement, but in the end it came to nothing. There was no light at the end of their tunnel. Therefore, I should like to envisage the possibility of the Government, as in other countries, giving deposit assistance, perhaps on a pound for pound saved basis, to young married couples.
I should like the Government, if it is practicable, to explore the feasibility of engineering additional fiscal incentives for builders developing estates of new flats or houses who are prepared to offer a proportion to young people. I am not referring to schemes which have been tried tentatively in local authority housing in a number of London boroughs, although such schemes are extremely welcome. If estate developers were prepared to offer a proportion of their properties on a new close or road being developed to young people at a discount off the prices they were to charge to everybody else, perhaps they might have a tax-free abatement on the proportion of profits emanating from such sales.
There are many other measures which time precludes me from proposing today. The sum total is that it would be extremely complacent and dangerous for us to say that, because of the realities of the market mechanism and market forces, the fact that inflation in house values has abated for the moment means that we ought not to get so worried about it right now, that the worst is over, that this is a temporary situation and that it will be better in future. We would continue to negate our central responsibility as a Parliament and, by extension, as the Government if we were to do nothing to make it easier for those, particularly in the South-East, who are precluded from buying houses because of the high prices today.
Time does not allow me to go into more detail. I should welcome some answers to the proposals I have put forward briefly today. Above all, whilst

1467
acknowledging the work that the Government have already done in discussions with the building societies in trying to begin to solve some of these problems. I should welcome a clearer indication that the Government regard the matter as urgently as I do.
4.15 p.m.
The Under-Secretary of State for the Environment (Mr. Reginald Eyre): I have listened with great interest to the views put forward by my hon. Friend the Member for Harrow, East (Mr. Dykes) I need hardly say how grateful I am to him for his references to the Government's feeling on this score. The Government are totally in favour of the expansion of home ownership, and I should like to assure my hon. Friend that the Housing Ministers particularly are very sympathetic towards the difficulties of young purchasers.
Owner-occupation is one of the remarkable features of contemporary social history. Only 10 per cent. of households in 1914 were owner-occupiers. The current figure is now about 52 per cent. The Government hope and expect the number of owner-occupiers to continue to grow. I believe few hon. Members and certainly no Member on the Government side, would wish to see anything done to make it more difficult for potential house purchasers to realise their ambitions to become owner-occupiers. For this reason the Government well understand the general concern with the recent sharp increase in house prices.
The origins of this problem were there when we took office in 1970. The demand for owner-occupation was then less strong and mortgages were less easily available. There was little confidence in the future among either builders or buyers. We took immediate steps to restore it. Pent-up buying power was released into the market. The industry responded by regaining its strength and increasing output. But new homes cannot be produced overnight in response to demand. Meanwhile, prices have inevitably risen.
We must put the increase in house prices in perspective however. First and foremost, the Government policies for the private housing market have meant a continuing rise in the number of people who
1468
can afford to become owner-occupiers; and here is a point I must stress: the young and the less well-off have not been losing ground in relation to borrowers generally.
We have no separate figures for the number of young married couples purchasing their first home, but the following figures are relevant. As between the first half of 1970 and the first half of 1972, it is estimated that there have been 32 per cent. more mortgages issued by building societies to first-time purchasers; 30 per cent. more to borrowers under 25; and 40 per cent. more to borrowers with incomes up to the average industrial manual worker's earnings. During the same period all mortgages issued have gone up by 39 per cent in number.
These are national figures, and the picture is much the same regionally. In other words, the prospect of home ownership has widened, and not narrowed, in recent years. First-time purchasers and the under-25s—which categories will broadly cover young married couples—are clearly holding their own.
Of course, there are greater difficulties in areas of especially high prices, such as Greater London, as my hon. Friend said. The London Housing Action Group is working away at the London housing problem in general. But it is both significant and encouraging to find that in the first half of 1972 an estimated 61 per cent. of all mortgages issued in Greater London by building societies went to first-time purchasers—much the same percentage as for the whole of 1970.
I have already mentioned that when we came to power we began by stimulating frustrated demand. This was highly necessary both for its own sake and to give back to the builders the will to build. We took a number of measures to bring this about. There was, first, the economic policy, which made credit easier and restored confidence and growth in real incomes generally. Secondly, some specific action was taken for the housing market itself. For instance, the option mortgage scheme was made more flexible. Stamp duty on mortgage deeds, and later on conveyancing deeds up to £10,000, was abolished. Money ceilings were removed on local authority lending to special categories of borrower. In all, a

1469
good deal has already been done by the Government to help with the high first cost of home ownership.
Young married couples, like all owner-occupiers with mortgages, already get substantial help. Tax relief on mortgage interest is worth about a 30 per cent. reduction in mortgage interest charges for those on the basix tax rate. The option mortgage subsidy scheme which the previous Administration initiated and which we have improved, is designed to help people with moderate incomes to buy their own houses by giving them a subsidy roughly equal to those available through tax relief to people with higher incomes.
It would, of course, always be possible in theory to give extra subsidy to young married couples, such as a contribution towards the initial deposit on a house or a specially low interest rate for mortgage repayments. But there are dangers in any such course. Extra assistance could well be counter-productive by stimulating price increases for houses, particularly when demand already exceeds supply.
There is little doubt that a more stable flow of building society funds is desirable. Care must be taken, however, to avoid any unnecessary disturbance of arrangements which are, in fact, supporting a steady growth in owner-occupation. The Government are confident that the building society movement is conscious of the need for stability and will do all that it can, within the framework of the investment and lending policies, to secure this.
My hon. Friend mentioned a number of interesting ways in which building societies might assist young couples. There are a number of ways in which the path towards home-ownership for the younger purchaser is being cleared.
One of the problems confronting young married couples is gathering the necessary capital to put down by way of deposit. Consequently, large percentage mortgage advances can be helpful. The option mortgage guarantee scheme is particularly useful in this direction. Under this scheme, building societies are prepared to grant loans larger than they would normally advance—sometimes up to 100 per cent of valuation.
I am grateful for my hon. Friend's complimentary remarks about the useful
1470
work of building societies. This is an example of how they try to help. The additional amount of the loan over and above the normal advance is guaranteed by an insurance policy. But the Government share the risk equally with the insurance companies. There is no charge for the Government's participation in this scheme, so that the insurance premium paid by the option mortgagor is less than would otherwise have been the case.
This is a popular scheme. It is estimated that the number of option mortgagors taking advantage of the guarantee scheme has risen from about 15,000 in 1968–69 to about 40,000 in 1971–72. The scheme has been used particularly by the younger and the lower-paid. The building society movement was also advised last year that if a man saves regularly with them for a period as short as six months and at a rate equivalent to his later monthly repayments he could be considered for an advance, which could be substantial.
Some local authorities are already prepared to advance 100 per cent. mortgage loans to people falling within the priority categories of borrower. Young married couples can on occasion fall within these categories—if, for example, they are high on a council's waiting list or are living in overcrowded conditions. About 30 per cent. of all local authority housing loans made to private people for house purchase in England and Wales last year were for 100 per cent. of the valuation of properties.
I recognise, of course, that even the availability of high percentage loans does not solve the problem of the resultant higher monthly repayments. But I am afraid that very extended repayment periods, for example, would not help much. A £4,000 advance of 8½ per cent. requires an annual repayment of £391 before tax relief. A 40-year advance requires an annual repayment of £353. The reduction in outgoings—about 10 per cent—is modest because of the lower rate of repayment of capital, on which interest has to be paid. Also, extending the repayment period beyond a certain point has the serious disadvantage of carrying close to or beyond retirement age.
Mr. Dykes: Would my hon. Friend not agree that most houses are sold

1471
eventually, after the purchase, on a much shorter time period than the average life of a mortgage? This must be taken into account as well.
Mr. Eyre: I accept that as a practical point. Statistically, it is about a seven-year period. But, in making their plans, a young couple cannot rely entirely on being in that position.
I am confident that building societies generally are as helpful as they can be over mortgage terms for young couples. Also, some local authorities have shown an interest in the "low start" mortgage scheme advocated by NEDO, under which the mortgagor makes lower repayments than normal in the early years of the life of the loan and higher repayments in the later years.
But there are other developments in housing, apart from mortgage terms, which can assist and are assisting young married couples towards home ownership.
Generally speaking, it is our view that the private builder is best equipped to provide houses cheaply and efficiently for the full range of demand. But there are areas in which it is appropriate for local authorities to sponsor the provision of new houses for sale, particularly to the lower income groups. In the last few weeks a number of authorities have been authorised to build for sale in areas where this would be helpful.
The Government's highly successful improvements drive is particularly helpful when used by purchasers of older houses which they modernise with the aid of Government grants. Many young couples, particularly in industrial towns, are in this way obtaining a house of good standard which may be lower priced than equivalent new houses.
Co-ownership provides a half-way stage between owning and renting. For those who cannot yet afford a house of their own, it provides some of the advantages of owner-occupation with the mobility
1472
and low initial costs of renting. The number of houses provided by societies operating with the help of loans from the Housing Corporation—set up by a previous Conservative Administration—is increasing rapidly.
But, above all, we believe that the greatest assistance we can give to young married couples who want to become owner-occupiers—and, indeed, to anyone who wants to own his own home—is to increase the supply of new housing. An increase in supply, coupled with the Government's counter-inflationary measures, should stabilise prices. So far the signs are good.
Thirty-eight per cent. more new private houses were started in the first nine months of 1972 in comparison with the first nine months of 1970. This represents a rise of 14 per cent. over the first three quarters of 1971.
These are encouraging figures, but the Government are not complacent in the slightest degree about the problems of young would-be house purchasers or other would-be house purchasers. We cannot, and shall not, be satisfied until the supply of new houses comes into balance with rising demand. The problem is one of local rather than national shortage. We are determined that enough land should be released, and enough homes built, in the right places, where people want them, to meet the needs of the private market into the foreseeable future.
I would sum up in this way. Homeownership has never been an easily realised ambition for the less-well-off members of our society. The Government inherited a situation of stagnant demand and falling output. Now demand is strong, and the output is growing, and we are confident that the Government's policies will bring home-ownership into the reach of more and more people.
Question put and agreed to.
Adjourned accordingly at twenty-seven minutes past Four o'clock.

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