House of Commons Hansard Debates for 12 Jul 1994

Mr. Jim Cousins (Newcastle upon Tyne, Central) : I am grateful for the opportunity that the hon. Gentleman has afforded me. On page 17, paragraph 93, of the Select Committee's evidence he speaks about a halfway house and urges his right hon. Friend the President to adopt it. Does the hon. Gentleman stand by his commitment to a halfway house, or has he abandoned it ?

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Dr. Hampson : Nothing on the record states that I backed a halfway house. If the hon. Gentleman reads the whole transcript, which he clearly has not done, he will see that I put to the President of the Board of Trade examples from across the world--from New Zealand to Sweden, from Canada to Holland and Germany. In all those countries the post offices are being steadily commercialised to the point of public limited company status, and then on to privatisation. I kept asking the President why our system cannot do likewise. I kept being told that it was because the Treasury would not allow it. The Select Committee decided that if we do not go ahead and privatise the whole service, we should at least free it up--and that is one of the options in the Green Paper. Certainly a certain amount can be done to provide greater flexibility and to allow the service to retain a higher proportion of its profits. That, too, is in the Green Paper. Conceivably we could change some of the regimes that control joint ventures, but only up to a point.

In the end there are two strict disciplines. The first is that, even under Labour, no Government could allow a public corporation to go on borrowing money in the private markets regardless, because that will only add to the public sector borrowing requirement. So although we may allow the corporation more freedom in commercial decision taking, that fundamental discipline will remain. All the Treasury mandarins will insist that the Post Office cannot indiscriminately add to the PSBR.

Equally, the Post Office will never be given enough freedom in that way. Post Office managers have pointed out that they do not want a halfway house. They want to be certain, when they draw up their plans for investment and for raising the money for that investment, that they can take the decisions themselves. They do not want to have to return to the Treasury for its authorisation.

Of course the process can be improved. We referred to this in the Select Committee as the fishing licence syndrome. It took the best part of a year of argument between two Cabinet Ministers to ensure the freedom of the Post Office to sell fishing licences. I am delighted that the President of the Board of Trade won the battle with the Treasury, although I doubt whether that triumph will go into his obituary. But why on earth were Ministers arguing about it at all ? There may be some liberalisation, but the Post Office would still have to get approval for certain projects. That takes time, and it is not the sort of commercial freedom that the management wants. Nor is it what is happening elsewhere in the world.

Clearly, the system has to change. I believe that hon. Members on both sides of the House agree--they certainly agreed in the Select Committee-- that the nationalised framework cannot be maintained. Given the competition and the opportunities, it is just not viable. Mr. Cousins rose

Dr. Hampson : I have already given way to the hon. Gentleman, who I suspect will make a speech of his own.

A Labour Government in charge of a public corporation controlled by the Treasury might like it to have certain privileges that gave it an advantage over the private sector. That gives rise to another of my criticisms. The private sector will not be happy with the sort of deals in which a public corporation would want to get involved. The Post Office was prevented from buying an airline. It might be extremely sensible for it to acquire its own airline, but that

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would enable it to compete with other airlines for all sorts of business. The private sector companies would have something to say about a corporation, backed by taxpayers' money and Government guarantees, behaving in that way.

The Post Office rightly wants to go into bulk-mail deals with printing companies--it might even want to buy one, with considerable knock-on effects.

In theory, such deals are excellent, but they could go wrong, and they would give the Post Office a privileged position vis-a -vis its competitors. They could also go seriously wrong, and if the state picked up the financial pieces, that would only underline a measure of protection that the private sector does not enjoy. For all those reasons a halfway house is not acceptable.

Mr. Malcolm Bruce : Is the hon. Gentleman seriously suggesting that if a privatised Post Office got into financial difficulties a Government could walk away from it and not pick up the pieces ? Does he accept that private companies might regard it as unfair that a privatised corporation continued to have the protection of a publicly guaranteed monopoly ? Is there not some unfairness in both solutions ?

Dr. Hampson : The truth is that this House must produce the legislation, which must contain certain fundamental reassurances for the British public. We all accept that the Post Office must have social responsibilities. In the case of British Telecom, the privatisation Bill included certain terms and conditions--BT has to maintain rural services and loss-making rural phone boxes. Similarly, in this case we shall require a universal service to all parts of the country, however remote, and at a standard price.

Secondly, there will have to be a regulator. We are learning as we go on about the regulatory process, and the Post Office regulator will have to be effective and tough.

Thirdly, whatever Opposition Members may say, the Government are not privatising the Post Office : this is a half-privatisation. There will still be the old links, and all the concerns about the connections between the Royal Mail, the Post Office network and the post offices in our high streets are misguided. They will be preserved. Moreover, for the first time the work force will have a say. I should like at least 10 per cent. of the business to go to them, thus involving them in the business and providing yet another safeguard for the social responsibilities of the service. To answer the hon. Member for Gordon (Mr. Bruce) further, I am optimistic about the growth of this enormous £4 billion enterprise. It has the capacity to raise huge sums on the financial markets. I see no reason why a privatised Post Office should be any less of a success story than BT or British Airways. Why do people spend all their time dreaming up scare stories ? All the worst imaginable options are being put to the British people in order to frighten them. The trouble is that the Labour party has such a narrow vision, its policies are so much determined by its wish to stay in the past, and it is so influenced by the unions' support that it will not look beyond the way in which things have always worked.

There is a new world of opportunity out there, ready to be seized. Why cannot the corporation be successful worldwide ? We have a chance now to increase its international presence and to make a great success of it. We

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have an opportunity to improve the quality of the service that we give to our domestic customers as a result of the growth and success that that private operation will enjoy, especially on the international scene, and we shall have bold and imaginative developments, such as share ownership for the work force. There will be improvement internationally, and improved customer provision and service throughout the country--in rural districts as well as towns. We can make that positive achievement if we pursue the option in the Green Paper--a balanced partnership between the public in the form of the Government, the public and the work force as shareholders and the management of the corporation. I believe that the management want to press ahead with that option, but people do not trust the Government and the Treasury--and for heaven's sake, given what Opposition Members say, day in and day out, why should they ? For heaven's sake, let us seize the opportunities. This will be a great success story for the Post Office, for the Royal Mail and for its work force.

5.30 pm

Ms Judith Church (Dagenham) : I thank you, Madam Deputy Speaker, for allowing me to make my maiden speech in this important debate, when so many hon. Members wish to speak.

First, I pay tribute to my predecessor, Bryan Gould, who served the people of Dagenham--and, before that, the people of Southampton, Test--loyally and energetically. Bryan had a distinguished political career, spanning two decades, during which he worked on trade and industry, economic and environmental matters. I know that he will be missed by many people in the House and in Dagenham, and I am sure that the House will join me in wishing him well in his future career.

My other predecessor, John Parker, was Dagenham's first Member of Parliament, a Member for 48 years and Father of the House. Some Members here today will remember him for his work as chair of the British- Yugoslavian Parliamentary Group. I can imagine his sadness, had he been alive today, at the tragedy that has unfolded in that country.

I am proud to be the third Member of Parliament to represent Dagenham. Built in the 1920s and 1930s, it has a long-established and close community, with strong traditions of public service. Many of its local councillors have served for 30 or 40 years. It is an area of great opportunity, which is crying out for investment, and rejuvenation of its housing and regeneration of its industry. Dagenham has the largest manufacturing work force in London, with successful companies at the leading edge of technology, such as the Ford Motor Company, GPT Telephone Cables and Rhone Poulenc Rorer. Those companies have not succeeded through paying low wages and having poor working conditions and low health and safety standards. I know that because, before coming to the House, I worked in industry, including seven years as one of Her Majesty's inspectors of factories.

There I worked with both sides of industry to improve workplace standards. That experience proved to me that only those companies, large and small, that invest in people by providing high-quality training and good working conditions can compete and win in today's global markets.

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I believe that national economic success goes hand in hand with the provision of high-quality local services. Strong economies invest in modern, vibrant services--schools, housing, transport systems--that enrich and improve the lives of their citizens.

The people of Dagenham rely on their local postal service, run in the public interest for the benefit of all. Now the Government want to go ahead with the maddest, saddest privatisation of all, that of the Post Office-- mad because our Post Office is one of the most successful postal businesses in the world, sad because the existence of an efficient national postal service is the hallmark of a modern economy.

However, the Government cannot find any new test of efficiency. They cannot identify any fundamental failings. The Post Office is not a creaking system in need of overhaul ; far from it. The Post Office is efficient and competitive, a tribute to public enterprise. The Government cannot bear that enterprise and innovation to be in the public sector.

Let me pause for moment, and examine what the President of the Board of Trade has to say in his Green Paper on the future of postal services :

"The Post Office has for centuries made a vital contribution to our national life."

Who could argue with that ?

"The Post Office is one of the nation's unifying forces". Who could argue with that ?

"The Government is committed to the maintenance of these services."

That is where the argument breaks down.

The Government will not do that by modernising the Post Office. They will do it by destroying it, by pushing yet another of our country's great national assets away from our people and towards pin-striped predators--or at least, they will try.

People know what privatisation means--a two-tier postal service where the standard provision becomes so poor that it is laughable. The President of the Board of Trade could have pledged today, had he been here, to back the Post Office in its drive to compete and sell in Europe, but he will not unless it is removed from the public sector. He could have pledged to protect the consumer from dramatic price increases, but he will not, and, as in the case of water prices after privatisation, which have increased by 67 per cent., the cost of the first class post will increase in leaps and bounds. People are already asking, "Which will come first, the 50p first class stamp or a general election that will save us from that fate ?"

The Government will try privatising the Post Office, which is so unpopular among their supporters, let alone people throughout the country, but trying is all that the President of the Board of Trade will be able to do. It is all that he has done since he first set up the review of the Post Office's future two years ago this month. It is not the 30-page Green Paper that has taken the time ; it has been the politics of it.

The President of the Board of Trade knew that he could not even begin to get privatisation through without a great deal of persuasion, not of the Opposition, not even of the country, but of his own colleagues. So, aided and abetted by senior Post Office managers, who, like the rest of the privatised sector, can smell the money they can make

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through that privatisation, the President thinks that it has got to the point where it might--it just might--get through its stages in the House and elsewhere.

It is not a genuinely consultative Green Paper, putting forward arguments objectively. The best option for the Post Office, and for Britain, as we have heard today from my hon. Friend the Member for Livingston (Mr. Cook)-- greater commercial freedom while keeping the Post Office owned by and for the whole country--is simply dismissed out of hand. The Treasury "will not wear it".

Full privatisation is no good either, because the Government "recognise"

that

"many people would prefer a closer link between the Government and Royal Mail than that option would provide."

In plain English, the Government recognise that many people want to keep the Post Office just as it is, operating for everyone in the country, on behalf of everyone in the country.

We are therefore left with a fudged and bungled operation--partial privatisation, with the Government keeping 49 per cent. of the equity. Why ? Because that is another way of trying to smuggle this astoundingly ill- judged privatisation past the people.

The Government will not succeed, because, when people start to realise just what the Government are planning to do to their Post Office, there will be a large increase in the Post Office's business. That has already happened, as constituents in their thousands, not only in rural areas but in inner cities and suburbs, write to tell Members of Parliament that they do not want their post office, a vital part of the daily life of most people in the country, to be privatised. That is when Conservative Members will suddenly realise that the Green Paper on the future of postal services is something else--a Green Paper on the future of their jobs.

Labour's policy on the future of the Post Office is right, because it is the policy of the people who use the Post Office. They want a good service, and they are getting that now. They want a nationwide price, a national network of post offices and nationwide delivery to every address in the country, not just to those from which the private sector can make the most money.

There is a case for positive change in the Post Office. The Post Office must constantly change to remain the world's best. It must be given the commercial freedom that its management seeks, with the full support of its work force, sub-postmasters and sub-postmistresses and its customers. People now know what privatisation means--big salaries for a few at the top and big prices for the customers. That is what happened with electricity, gas and water. We will not let it happen to our Post Office.

5.40 pm

Mr. Edward Leigh (Gainsborough and Horncastle) : It is a great pleasure to follow the usual courtesies and congratulate the hon. Member for Dagenham (Ms Church) on her speech. I thank her on behalf of the whole House for her kind words about her predecessor Bryan Gould, who was and is held in enormous respect in the House, not just because he was a rebel-- there is no harm in being a rebel occasionally--but because he was a thinking and a principled one. We wish him every success and enjoyment in New Zealand.

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I also congratulate the hon. Lady on the competence with which she delivered her speech, which was a classic of its kind. She spoke with great knowledge and movingly about her constituency and addressed the arguments extremely well, although we did not agree with all of them. We wish her well. She said that her predecessor but one became Father of the House. I am sure that we will continue to listen to her speeches until perhaps she becomes Mother of the House some time in the next century.

There are two debates about the Post Office--the real debate and the political debate. The real debate about the nature of the ownership of Royal Mail and the degree of commercial freedom that it should have has already been determined not by politicians, not by the House, but by domestic market pressures, and especially by increasingly cut-throat international competition.

The political debate has yet to be determined, and either side could win it in the coming year, although I suspect that the row over any privatisation will soon settle down. The dust will soon settle as it has settled over every privatisation. I want to deal with the political debate because that is where the opportunities and discretions still lie for the Government. I should like to make a few suggestions to ease their path. Perhaps I should first address the real debate.

I was given responsibility for the Post Office as long ago as the spring of 1991. I immediately began a series of discussions with the Post Office and with Sir Bryan Nicholson, the then chairman of the Post Office board. I know that I shall be accused of this, so I freely admit to starting with the view--or, from the point of view of some people, a prejudice--that, in a commercial situation, private companies are better equipped to create commercial opportunities. I accept that I suffer from that view or prejudice, but any objective observer would conclude--certainly all those who advised me soon came to the view--that politics alone has denied the Royal Mail a role in the private sector to which it is well suited.

When I took responsibility for the organisation, I felt that we had dilly- dallied for too long, and that we should grasp the nettle that politics had prevented us from grasping for about 13 years. I set the ball rolling, and it has been rolling for a long time. But the end is in sight, and the Government have said that their preferred option is privatisation. That is in respect of the Royal Mail, but the situation with Post Office Counters is a little different. Just as the overall debate is confused between politics and the real world, so this debate is also confused between Royal Mail and Post Office Counters, which, in effect, are completely different businesses. Royal Mail is now essentially a pure business operation overwhelmingly concerned with carrying letters from business to business and from business to people. The business of carrying letters from people to people is a small part of the total turnover. Royal Mail is increasingly subject to international competition. The vision of Rowland Hill, an adviser to a former postmaster general, of a uniform tariff and service worked well in a primitive age of bad roads. In strictly commercial terms, it probably does not make much sense, but I quickly add that we do not live in a strictly commercial age, thank God.

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In this strictly commercial set-up, there is an enormous social dimension, represented by the daily walk of the postman up the garden path. That is the last daily delivery left. In many ways, the postman seems the last relic of a bygone age. I do not see anything wrong with relics or tradition. It would be an act of consummate vandalism and political madness by the Government to tamper with that tradition of the daily walk up the garden path. Let us keep our uniformed postman. Let him roll on undisturbed into the next millennium, but in the process please let us preserve some semblance of reality. For years, Post Office management have waged with the Government a forlorn battle to deliver mail "once over the ground". Whoever owns the Post Office, that has to happen. It is important that it happens once a day, and that could and should be guaranteed.

The public view the Post Office largely through the wrong end of a telescope, at the postman delivering his letters. The commercial reality is of increasingly cut-throat international business in which other post offices, particularly those of Denmark, Holland--about which we have heard- -and Germany, freed of Government ties, would increasingly cream-skim profitable bulk business from our Post Office.

The counters business is even more of an irony. It is largely a shop window for Government services, mainly social security, but 19, 000 of those 20,000 shop windows are privately run, albeit under ludicrously severe Government control and restriction on what they can and cannot sell. In short, things are in a mess, contrary to the rosy view that is often painted of the Post Office. The public view of a successful, friendly organisation is in reality under increasing commercial threat to its viability, internationally to Royal Mail and domestically--a point that has not so far been stressed in the debate--to Post Office Counters.

If nothing is done, if we take the easy way out politically--I fully accept that it would be the easy way politically : it is the route for which Labour has opted--the Post Office is doomed to gradual decline. If we are to save the Post Office, we must have the intellectual honesty and vigour to propose solutions that will work. For instance, we must not say that somehow the public can own an organisation but not control it and be responsible for its borrowing.

The case against so-called commercial freedom in the public sector was made brilliantly by my hon. Friend the Member for Leeds, North-West (Dr. Hampson) and by the Minister of State. It is set out strongly in chapter 5, paragraph 5, of the Green Paper. Labour speakers have signally failed to answer the points set out there. The Green Paper states that the controls that the Government levy on the Post Office

"reflect the fact that the risks assumed by nationalised industries are ultimately underwritten by the taxpayer. In particular, Government controls over borrowing by public corporations (all of which, by definition, fall within the public sector borrowing requirement (PSBR)) provide a discipline over all funds which are raised with the backing of the taxpayer and for which the Government is ultimately accountable. Without such controls, nationalised industries would have a clear advantage over commercial rivals". Labour Members have not answered, and cannot answer, the overwhelming case against so-called commercial freedom in the public sector. It is a red herring and a canard, and simply does not work. In the real world,

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one must make a choice between a nationalised industry that one owns and ultimately controls, and a privatised industry.

Mr. Cousins rose

Mr. Leigh : The Opposition spokesman is pregnant with a question, so I give way to him with some pleasure. I hope that he will answer that point.

Mr. Cousins : Does the hon. Gentleman think that the markets will believe that a company in which the Government will have a 49 per cent. shareholding could ever go bankrupt ?

Mr. Leigh : The hon. Gentleman fails to understand the point made by my hon. Friend the Member for Leeds, North-West (Dr. Hampson). Had he listened, he would have heard my hon. Friend talk about all the joint ventures that the Post Office wishes to undertake--for example, buying a printing business.

Is the hon. Gentleman suggesting that joint ventures, purchases and risks will ultimately be underwritten by the Government ? That is what would happen if we retained public sector control of a business but allowed complete commercial freedom.

Mr. Cousins : The most significant example offered by the hon. Member for Leeds, North-West (Dr. Hampson) was that of the airline venture. I remind the hon. Member for Gainsborough and Horncastle (Mr. Leigh), who was the Minister who stopped it, that the venture involved the Post Office taking a 49 per cent. share. Is he really saying today that, as a Minister, he vetoed a 49 per cent. share because the business was still in the public sector, but that the whole case of the Green Paper, which depends on a 49 per cent. share, is something quite different ?

Mr. Leigh : If I did not allow something that the Post Office wanted to do, it must have been under Treasury instructions. I commend the Government's balanced package in the Green Paper, which deals with the two fundamental problems facing the Post Office. By selling 51 per cent. of Royal Mail, the new company will become a huge asset to Great Britain plc. It will be able to defend itself against international predators, just as British Telecom and British Gas have done. They have become powerful players in the new global marketplace.

I have always argued that the public must notice no difference. With the help of the regulator, I hope that they will not. Incidentally, what happened to my idea of calling the regulator the "Postmaster-General" ? It has obviously sunk without trace since I left the Department. We should resurrect some of the great old titles. Why call the regulating body something as dreary and boring as Ofpost, or whatever ?

As a sort of outrider for the Government, I believe that a 100 per cent. sale would make more commercial sense. Why retain 49 per cent. if, as is said in the Green Paper, the Government will not intervene in the company ? What is the logic in that, apart from politics ? [Interruption.] I accept that politics is important.

The Green Paper states in chapter 5, paragraph 21, that the Government

"would not expect to vote its shareholdings on resolutions moved at General Meetings of the company although it would retain the power to do so."

When I was responsible for British Telecom, in which the

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Government were a major shareholder, I was under strict instructions from my civil servants not to try to have any direct influence in the company. What is the point of retaining 49 per cent. if we do not make use of it ? I apologise for this slightly naughty interlude, but I am sure that my hon. Friends on the Treasury Bench will forgive me.

The public are not really interested in whether the Government own 49 or 51 per cent. ; they are interested in the future of the postman, and in service delivery. Why should not the postman become, in time, a real community deliverer, especially in rural areas ? In particular, elderly people would welcome someone calling at their doors every day. There is a vast network of people--the postmen--ready and able to visit every door every day. Why are we just using them mainly to post one lonely item of junk mail through a letter box ? Why are we not fully using the service that could be provided by the daily deliverer ?

Too many people in society are lonely and remote. The postman's job is often low-paid, mechanical and boring. Would he not welcome an upgrading of his role to something more personal and responsible ? There is no limit to the services that he could provide--such as milk, newspapers, groceries and personal contact. There is no limit to what elderly or rural people might conveniently receive from a daily community deliverer. We should not allow one of the last of the personal daily services to wither on the vine like so many others. We should use the new commercial opportunity to provide a greater public service.

It has been a titanic struggle to persuade the Treasury to allow sub-post offices to sell a wider range of commercial services. I congratulate the Minister on winning that struggle. However, I suspect that it has happened only because the Treasury reached the sensible view that Royal Mail privatisation would not otherwise be deliverable. It is sensible to keep the headquarters operation in the public sector to reassure the public. However, it actually means very little, as increasingly it would become a clearing house for Government business.

My right hon. Friend has won his battle to allow post offices to pay pensions over the counter. As we know, not to do so would be political madness. I welcome the £130 million-worth of automation announced in the Green Paper. That will help to reduce fraud, and to make the operation more efficient. However, I suspect that, with encouragement and an ever wider use of bank accounts, more and more pensioners will choose not to draw their pensions at local sub-post offices. Therefore, diversifying the business is not only good sense from the Government's point of view : it is essential for survival. I am disappointed with what the Government say in chapter 4 about the commercial activities in which sub-post offices will be allowed to engage. It is full of mealy-mouthed phrases and I detect the dead hand of the Treasury. It says, for example :

"Any displacement of private sector activity would in these circumstances be voluntary . . . the proposed activity would help create a new market for services which had previously not been available to the public . . . the entry of Post Office Counters is likely to lead to significant growth of existing markets . . . Post Office Counters is unlikely to have a significant impact on existing private sector companies".

What do those phrases mean ? Do we detect the hand of the Treasury in seeking to tie down sub-post offices in what they can or cannot do ? I note that my hon. Friend the Economic Secretary is now on the Front Bench. I assure Opposition Members that sub-post offices are threatened

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not by the privatisation of Royal Mail, but by the diminution in their services as more and more people take their benefits through the post. The only way to save them is to give them greater and greater commercial freedom. The mealy-mouthed phrases that I have quoted will not help. Sub-post offices must be given full commercial freedom to deliver services if the essential network throughout the countryside is to be retained.

Overall, the Government have produced a package that is probably the only conceivable one. It could have been identified within months--certainly I and those working with me did so. However, the very length of time that the Government have taken has been a shrewd political move. I am sure that my right hon. Friend the President of the Board of Trade, whom I admire immensely, decided to play it long and allow public and political opinion to mature.

Above all, he has given the senior Post Office management the confidence, which they understandably lacked at first, to insist both explicitly on full commercial freedom and implicitly on privatisation. Even the very Post Office brief provided for our debate mentions the fact that the Germans and the Dutch are moving towards privatisation. That is the real debate among socialist and Christian Democrat Governments around the world. They know that there is no choice. Only the British Labour party has a black hole in which all creative ideas are sunk, never to return until they have been proven by us.

The Opposition are wedded to a concept which, in their heart of hearts, they know simply will not and cannot work. We need only consider the unlikely event of a Labour Government owning the Post Office, yet tamely accepting a massive increase in Post Office borrowing to innovate, or a Post Office determined to implement unpopular decisions such as "once over the ground".

What is Labour's policy on "once over the ground" ? Would it tamely allow a Post Office that it controlled, albeit with so-called commercial freedom, to implement a policy that was fundamentally unpopular with its constituents ? Of course not.

One has to reach the conclusion that this so-called commercial freedom in the public sector is a political gimmick--no more, no less. I understand, however, that, if elected, a Labour Government would buy back control of Royal Mail. That leads me from the real debate to the political debate. We must ensure that the public appreciate what a disaster that would be. The key lies in the effectiveness of the regulator or the postmaster-general in ensuring a peaceful transition to private ownership, but it depends equally on the nature of the sale.

I am delighted that Post Office workers are to receive 10 per cent. of the 49 per cent. sold. It should give them a stake in the business. I should like that stake to be bigger, but I understand that stock exchange rules forbid the work force from receiving more than 10 per cent. of the shares.

I understand from the Library that rule 4.8 of "The Admission of Securities to Listing", usually known as the Yellow Book of the stock exchange, states :

"preferential allocation is allowed in respect of the securities not placed firm, normally only to existing shareholders, directors, employees and past employees of the issuer of its subsidiary undertakings, up to a maximum of 10 per cent. in aggregate of the value at the offer price of the securities not placed firm."

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That makes no sense, but it is a stock exchange rule. The only point we need to understand is that we can sell off only 10 per cent.

I have been doing some research, and I understand that, after incorporation but before flotation, stock exchange rules do not apply. I hope that the Economic Secretary or the Under-Secretary of State will clarify that. There are separate rules of public sector issuers set out in chapter 22 of the Yellow Book, which state that such issues "need not comply" with the provisions of chapter 4. The Library contacted the stock exchange and informed me : "The Exchange, however, was at pains to stress that were the Post Office to be privatised it would obviously be a very special issue and special conditions would probably apply.".

My contention is that it would be possible to sell a greater share of the 49 per cent. to Post Office workers. The possibility of selling a large part of the business to the work force is an attractive one. The greater their stake, the less enthusiastic the workers will be about a Labour Government getting their sticky and impecunious fingers on the business in which they themselves have a large stake.

What the Labour party will assume to be a popular policy of buying back a business could well rebound on them, even if Post Office workers have only 10 per cent. of the business. If I am right, it might be possible to sell them more than 10 per cent. of the business.

We could go still further. We should commit ourselves in our manifesto to introducing legislation to sell a further tranche of shares to Post Office workers so that Post Office workers will know that, if a Conservative Government are elected, they will have the opportunity of buying more shares at a preferential rate, but that if a Labour Government are elected, they will lose that right altogether.

Of course, we could sell the shares--I am doing further research on it--on the basis that they are paid dividends like anybody else, but the shares can be sold only into the work force pool, ensuring that the work force always retain a powerful and profitable input into the business. All that would be on top of what would be a popular sale to the public, extending opportunity and ownership in the way that we know so well.

In conclusion, we can produce a popular package not only doing what is right for the business, but convincing the work force and the public alike that we can create a dynamic business for the future in which sub-post offices, particularly in rural areas, sustaining village shops and providing an essential community service, will be given a new lease of life, in which postmen can acquire a profitable stake in their own business and be given opportunities for extra and rewarding work and in which the public will have confidence that a great British company is fighting for Britain abroad and at home, delivering the traditional service that we all value.

6.3 pm

Mr. Malcolm Bruce (Gordon) : I join the hon. Member for Gainsborough and Horncastle (Mr. Leigh) in congratulating the hon. Member for Dagenham (Ms Church) on her excellent maiden speech. It demonstrated her confidence as a new Member and her knowledge of her own constituency and its industries. I am sure that we shall hear a great deal more about that in her time here.

We all appreciated the hon. Lady's remarks about Bryan Gould, who had friends across the House, was well liked

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by us all and will be missed. I hope that the hon. Lady will not take it personally if I say that the only reason why I wish he were here today instead of her is that he might have been able to tell us exactly what happened to the Post Office in New Zealand as a result of the ideas that the Government are bringing into play. I am sure that we shall hear a great deal more from the hon. Lady and we look forward to that.

This is not an early debate--it is extremely late. It is more than two years since the Post Office started its campaign of pressure for greater commercial freedom. As the hon. Member for Vauxhall (Ms Hoey) said, the Government have been holding the Post Office back. It is extraordinary to hear passionate speeches from Government Back Benchers about the enormous need to enable the Post Office to respond to competition when it could have been doing so a long time ago were it not for incompetent and dithering Ministers who even now have not been able to produce a clear-cut, comprehensive or intellectually coherent set of proposals.

The Green Paper is confused and contradictory. All sides accept that the status quo is not an option and nobody wishes to defend it, but how do we deliver greater commercial freedom and maintain a high standard of public service ? In reality, there is no disagreement about that either : the argument is about how to get there. It is absurd for Conservative Members to argue the difficulty and then to suggest that the only possible solution is the one produced by the Government. On 1 February the President of the Board of Trade told the Select Committee that this was an extremely complex and difficult issue ; it has not suddenly become easy and it would be foolish for Conservative Back Benchers to pretend that it has.

The constraints currently operating in the Post Office have been and are Government imposed ; they do not come from anywhere else. The Government appear to be saying, "Because we have imposed a set of unacceptable, inflexible restraints on the Post Office, we must privatise it because we lack the imagination to change the rules to meet the needs of the Post Office."

The Government use the Dutch post office, or at least the competition from Holland, as a prime source of authority for their argument. We are told that the Post Office must be freed to respond to competition, especially from the Dutch. And so it must, but the competition is coming from a Dutch post office which is currently operating--and has been for 25 years--with exactly the kind of commercial freedom that is proposed and rejected in option one of the Government's Green Paper. It is true that the Dutch Government are planning to sell shares in their post office--but only 30 to 40 per cent. of them. The Dutch have no difficulty in grasping the distinction between 49 per cent. and 51 per cent. Clearly, a Dutch coalition Government--that is what they usually have in Holland--do not have the ideological hang-ups of an intellectually split British Conservative Government.

The issue appears to have become a football for leadership contenders who need to express their right-wing credentials in public, in a sense flirtatiously. They need to act like political tarts to see how much support they can get to secure their political future at the expense of the real needs of the Post Office, which requires a more disciplined and intellectual approach. The Government are saying, "We have tied our own hands and now we cannot do anything because our hands are tied." They have adopted

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