Inner London Letter Post (Hansard, 8 August 1980)

§ Mr. Adam Butler

[pursuant to his reply, 7 August 1980]; On 12 September 1979 my right hon. Friend the Secretary of State for Trade under sections 47(1), 474W 49(2) and 51(1) of the Fair Trading Act 1973 referred to the Monopolies and Mergers Commission the matter of existence or possible existence of a monopoly situation in relation to the supply of services of conveying, receiving, collecting, despatching and delivering letters; and for the purposes of this reference considertion was limited to the area comprising the numbered London postal districts of the Post Office. The commission was asked to state whether any act or omission on the part of the Post Office, if it were found to have a monopoly, operated or could be expected to operate against the public interest. It was asked to look at the length of time taken, the reliability, availability, and the quantity and quality of resources used to supply the services of conveying, receiving, despatching, collecting and delivering letters.

The commission's report on the inner London letter post was presented to Parliament on 31 March 1980 and was published on 1 April 1980. When the report was published my right hon. Friend the Minister for Consumer Affairs said that the Secretary of State for Industry would now be discussing with the chairman of the Post Office board how the weaknesses pointed to in the report could be remedied so that the Post Office's standards of service could be restored to an acceptable level. She said that a further announcement would be made when agreement had been reached on a programme of action.

The chairman designate—(Posts and National Girobank)—has now sent me a programme of action which I am laying before the House today.

I am satisfied that the Post Office has examined the commission's report, and in particular its recommendations, and has responded in a positive and constructive manner. It has accepted all but four of the commission's recommendations, although in some cases that acceptance is subject to qualifications of cost or profitability. The Government have discussed these qualifications with the Post Office and accept the Post Office's reasons for them. Likewise, in the case of the four recommendations that the Post Office feels unable to accept I am satisfied that it has taken full account of the commission's reasons, and that its position can be justified. The programme of action which I am placing in the Library of the 475W House, concentrates, rightly, on the main areas of public interest identified by the commission. The Post Office has made very clear that it intends to improve productivity, quality of service, and to eliminate restrictive working practices, with all possible speed. Indeed, in all these areas progress has already been made and is continuing.

The Government note in particular that in relation to recommendation 28 the Post Office has set itself the objective of achieving an increase in productivity of 15 per cent. over the three-year period, with the intention of further improvement thereafter. The Government will await the report on the prospects for such further improvement which the Post Office has undertaken in its response to provide in the light of progress over the next year. In considering that report they will have in mind the Post Office's acceptance of the desirability of a return of productivity to former levels as recommended by the commission.

I have paid particular attention to paragraphs 12.15 to 12.22 of the corn-mission's report, which deals, inter alia, with financial targets and performance objectives. The Government recognise the need for an examination of postal business's performance aims and financial target and their relationship to productivity and quality of service and they have agreed with the Post Office that the Government and the Post Office should examine this whole area to see whether any improvement is needed. I shall be reporting on the outcome of this examination.

The Government have also noted recommendation 36, which says that advantage should be taken of the forthcoming separation of the postal and telecommunications businesses to consider the appointment at board level of executive directors with wide experience of financial and personnel management in commerce or industry.

Finally, I stress that it is imperative that progress on implementing the report's recommendations be sustained both in the immediate future and in the longer term. I shall ask the Department's officials to monitor progress very closely, and in two to three years' time shall consider whether a further public inquiry into the general question of the Post Office's efficiency and costs is called for.