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an absurd position. In the meantime, during the past two years they have been messing about with the Post Office in an unhelpful and fruitless way.

Two years ago, the President of the Board of Trade came to the Dispatch Box to tell us how essential it was to sell off Parcelforce as a separate entity. I have opposed that throughout. I believe that it has been an absolute disaster for the consumer and has achieved nothing in improved delivery of service. However, I welcome the fact that the Government have acknowledged the error of their ways and accepted the case for bringing letters and parcels back together. The argument also reinforces the fact that parcels and counters are not separate and distinct, as Conservative Back Benchers are arguing. I will illustrate that with an anecdotal experience of my own. I complained to my local postie that, not being home much of the time, I was fed up with being told that my bound copies of Hansard were available for collection at a parcels office six miles away. He told me that he was not allowed to leave parcels if I was not home. I do not want to get that postie into trouble, but I have come to an arrangement with him. He said that he could leave parcels for me at the local post office 200 yards up the road. I was expecting a parcel of books--not Hansard --that I wanted to read as a matter of urgency, so I told the postie that I would appreciate it if he would do that. In fact, however, I did not collect the books for some days after they were delivered and when I asked at the post office for the parcel the lady behind the counter turned to her colleague and said, "Gladys, what do we charge for storage ?" I hasten to stress that it was a joke, but the serious point behind it is that Post Office Counters was essentially saying, "The parcels service is nothing to do with us ; we do not see parcels business as part of our job, because we are not paid for it." My concern about the separation of Post Office companies into different ownership is that traditional co-operation will disappear.

The assertion that there is no case for keeping counter business and the Royal Mail together should not readily be accepted, and it is not convincingly argued in the Green Paper. It was included as a political expedient, in the hope of buying off threatened Conservative Back-Bench rebels. I say to them--I am sorry that the hon. Member for Macclesfield (Mr. Winterton) is not in his place--that they had better consult. They may return from the summer recess with a rather less sanguine view of the Government's case.

As to the Royal Mail proposals, the President of the Board of Trade has argued--and specifically did so to me in his evidence to the Select Committee--that giving the Post Office commercial freedom is unfair to private sector companies. I have consistently argued that, by the same token, giving a private company the protection of a monopoly will also be unfair and companies will complain about it. There is no simple solution to that dilemma, as the Government suggest. I can imagine people saying, "We want the Post Office monopoly removed to give us a level playing field." We all know that the consequence of removing the Post Office monopoly will be that a universal service to every household, every day, will collapse. That is a dangerous precedent.

The Government say that Post Office borrowing must be considered part of the public sector borrowing requirement. That is not the case with the Dutch or French Governments, so there is no reason why it should be with the British Government. It was never the case in all the

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decades when the Government were a major shareholder in British Petroleum. The Government may argue that BP was different because it was an international company dealing in commodities.

Mr. Cousins : There was British Nuclear Fuels Ltd.

Mr. Bruce : There are many examples--the BBC was also mentioned. The Government are able to make a distinction when it suits them. The hon. Member for Livingston (Mr. Cook) informally told me that the PSBR and Treasury rules are not a science but an art meant to serve the needs of the Government and the public. The Government are using them as an ideological blunt instrument, which is not relevant to current needs.

Comparisons were made with BT, but its privatisation came at a time of dramatic technological change, which allowed BT to provide cross-subsidy services and to generate enormous profits. That gave the impression of a windfall benefit which would have occurred in any case. I am not saying that BT's privatisation did not bring benefits, but it is not a valid comparison.

Mr. Peter Ainsworth : Supposing that the hon. Gentleman's recommendations were accepted, the Post Office taken out of the PSBR and the external financing limit reformed in the way that he suggests, what would be the effect on the gilts market and the Government's ability to raise capital there ?

Mr. Bruce : The hon. Gentleman knows perfectly well that it would not be much different from the Government having 49 per cent. of the Post Office--as a previous exchange demonstrated. It is not possible for the Government to walk away from the Post Office in any case. They can say that the Post Office is entitled to raise private money but that the Government will not underwrite risk capital. It mystifies me that right-wing Members who claim to be radical have so little imagination. It is possible to find different options and solutions to meet different needs. Difficulties are being manufactured to support an ideological case rather than because there exist cast-iron, rigid, inoperable or unchangeable rules. I said that the separation of the Royal Mail and Post Office Counters would be artificial. In the long run, it is likely to prove unsustainable. It was suggested to me by someone inside the Post Office that separation is a car park solution --a buy-off while things are sorted out, but not a permanent solution. Everybody acknowledges that POC needs investment as well as freedom to develop additional services. The Green Paper does not make clear where that money is to come from, but only states that the Government recognise the need for urgent modernisation and investment in computer equipment. It identifies a cost of £140 million, which it is hoped will come from the private sector.

If that money is to come from the private sector, is that not privatisation by the back door ? It appears that services are being kept in the public sector, but so much of the money would be raised from the private sector that the operation would effectively be privatised. In response to the intervention of the hon. Member for Surrey, East (Mr. Ainsworth), if it is all right for Post Office Counters to raise

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£140 million on the private market, what is the difference between that and the Royal Mail ? The Government contradict themselves at every twist and turn.

Mr. Cousins : The Post Office has accumulated £1 billion of public sector funds as a result of its commercial successes over the past 10 or 12 years. If it were privatised, there would be nothing to stop it switching out of those public sector funds into other kinds of investment. That would also affect Government finances.

Mr. Bruce : There would be an immediate loss of access to revenue, plus a continuing loss of some of the dividend that might otherwise be paid --although the Government are shrewd enough to realise the need to maintain access to the dividend.

I want to press the Government harder on what is meant by retaining the right to determine for Post Office Counters what is fair competition. The hon. Member for Gainsborough and Horncastle (Mr. Leigh) was right to make reference to a lot of mealy-mouthed words that need explaining. There is a danger that the counters operation is being given the illusion of freedom but that that will turn to disappointment because the Government have decided that they will not allow the counters to develop certain operations. I am a little more cynical than the hon. Member for Gainsborough and Horncastle. Given the experience of recent years, it may be that a rich backer of the Conservative party will say, "I don't like those services being developed by Post Office Counters--and if you will not use your powers to block them, I will cease making donations to the Conservative party."

The Economic Secretary to the Treasury (Mr. Anthony Nelson) indicated dissent .

Mr. Bruce : The Economic Secretary snorts. He knows perfectly well that is the way that political favours have been bought in recent years. The idea that the Government back free enterprise, competition and markets is not one that has ever impressed me. I believe that they are buyable by the highest bidder. Some successes were at the expense of other companies. Reference was made to British Airways. It may be a successful and competitive airline, but it has achieved that by destroying every British- based competitor along the way, using all sorts of dubious methods. The Government regard that as free and fair competition, but I do not.

Mr. Clifton-Brown : Will the hon. Gentleman give way ?

Mr. Bruce : Not on that point. [Hon. Members : "Oh."] I have raised it many times before in the House and my views are well known. Lord King and Colin Marshall are tired of hearing them.

How will the Post Office network develop in future ? What will be the future role of Crown offices ? They currently number 750, but that figure is rapidly reducing. I represent the largest constituency in Scotland and the fastest-growing constituency in Britain ; yet it has no Crown offices. When I protested about the closure of Crown offices, the Post Office said, "We will improve the service by offering them to private operators." That happened in the short run, but I know from hon. Members representing other constituencies that that is not always the case.

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I have then asked the Post Office what the role of Crown offices is. If there is no difference, or the service is even better, why is it keeping any of them ? I have never had a clear answer to that question. We are entitled to know. I suspect that the reason is that the Post Office needs enough of those branches in its network to know how they operate, to be able to train and to provide the management back-up. So I worry what will happen when those offices change hands in future, and do not go to people who have been trained within the Post Office system and have the knowledge and understanding of how they work. What will the Post Office do then ?

In my constituency I have been supporting a campaign to open a new post office, at Burghmuir drive in Inverurie.

Mr. Cousins : What is your majority ?

Mr. Bruce : My majority is nearly as large as the number of consumers who would use that post office.

I wish to make a serious point. In that instance a private individual, a Mr. Alex Black, is saying, "I wish to open a post office and a pharmacy in a shop unit and in both cases I have to go to some other organisation to get a licence, which is currently being denied." Mr. Black has enormous support from all the residents in the area, and there are plans for building hundreds more houses nearby. Interestingly, the Crown office that was privatised two years ago is the principal objector to Mr. Black's giving that extra service, which the community wants, and the Post Office is backing the previous Crown office against the new operator. If the network is to be protected, we ought to see new post offices being opened and not just existing offices being closed, especially where there is population growth. Although I represent the fastest growing constituency in the country I have seen only one new post office open in 11 years, but I have seen several closed and many more cut from being full offices to operating community hours. We want to achieve a balance, and we need answers both from Post Office management and from Ministers on how the position is likely to develop.

The Green Paper refers to VAT, but no one has mentioned it in the debate so far. I am not at all happy with what the Government say about VAT in the Green Paper, which is :

"the Government is satisfied that none of the options it is considering for Royal Mail and Parcelforce would mean imposition of VAT".

Mr. Cousins : On letters.

Mr. Bruce : Yes, on letters.

I am not satisfied just because the Government are satisfied. After all, the Government were satisfied that they were in the right on the transfer of undertakings directive, and after 11 years they turned out to be substantially in the wrong. That is costing the taxpayer a great deal of money even now. I ask the Minister to undertake to obtain during the consultation exercise a clear opinion from the European Commission on what the position will be--not what the Government think, but what the Commission thinks. That is a major factor, and if the Government have got it wrong that could push up the price of a first-class letter to nearly 30p. We are entitled to an answer to that question.

I asked the Minister of State earlier about Sunday collections, but I did not receive a reassuring response. The Minister looked surprised that anyone should mention Sunday collections, and implied that no guarantee was

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required. As a member of the Select Committee on Trade and Industry, I remind the Under-Secretary of State that we campaigned ceaselessly on that matter for several years. As hon. Members might expect, I pay tribute to Sir Robin Maxwell-Hyslop, who always proved himself a terrier in his dealings with the Post Office, and who succeeded in persuading it to reintroduce Sunday collections. Those have now proved extremely popular, and are much appreciated.

That is exactly the kind of business that Conservative Members have told us represents the declining unprofitable end of the mail business. It is all about letters and cards from grannies to granddaughters, and so forth. That is most important in terms of the Post Office's social obligation, but it is not profitable.

Mr. Paul Tyler (North Cornwall) : Is that not an example of precisely the kind of service about which all kinds of assurances about the quality of service after privatisation have been made to peripheral areas of the United Kingdom, such as the areas that my hon. Friend and I represent ? Yet whether it concerns water, gas or electricity, as soon as privatisation is bedded down the operators say that it is too expensive to provide that service to the more peripheral and scattered areas and there is a reduction in quality of service. We pay more for less.

Mr. Bruce : I agree with my hon. Friend.

I am coming to the end of my speech, but I still have some important points to make. The Government say that there will be a licence, a regulator and guarantees of certain services, which they have identified as the most important guarantees--although I have mentioned some that they appear to have forgotten, and that I hope they will consider.

I do not suggest that the Government are insincere in saying that. I believe that they recognise the importance of those services and want to guarantee them. However, the problem is that once the Post Office has been put into the private sector and given its freedom--that is what the Government wish to do--the pressure of competition will inevitably mean that the management will say, "We are sorry, but to respond to competition we have to get rid of the loss-making services, which means closing some of the network, reducing daily deliveries and cutting out second deliveries"-- those are important to business, but not necessarily profitable--"and we have to consider surcharging the outlying areas : we cannot guarantee next day delivery to the outer Hebrides unless people are prepared to pay a surcharge, or whatever."

That is how things developed in New Zealand. I do not suggest that what happened there has to happen here, but there is a real danger. Even with good will and serious intent, the Government could find that they have created something over which they have lost control, and brought about the commercial pressure that threatens the public service.

That brings me to my conclusion of principle. My party and I did not oppose in principle previous privatisations, such as those of gas and electricity. But we objected to the way in which the Government proposed to carry them out, and especially to their failure to introduce effective competition at the time of privatisation. In those cases we have been proved right. The gas industry has now had to introduce competition in a much more painful and unstructured way, and that will have to happen with the electricity companies, too. In the meantime, consumers

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have lost out. The fact that electricity prices have fallen is not the point. Management have managed to divert a lot of funds to maintain high dividends. That has been good for investors, but according to the watchdog consumer protection body, consumers have lost out and electricity prices are at least 5 per cent. higher than they should be.

I shall not even mention water, which is already a big political embarrassment to the Government. We opposed gas and electricity privatisation not on principle but because of the competition aspect. However, we all agree that with the Post Office, competition is not the answer in relation to the core service : nobody is arguing for competition there. Everybody recognises that there must be a guaranteed monopoly--and there is a point of principle there. If there has to be a publicly guaranteed monopoly, that monopoly must be accountable to the public sector.

That is a fundamental principle, and one that even Conservative Members should accept. Why should the House vote money, provide support or give a licence to a body, yet not be able to provide proper accountability to the people who are elected to this place to control such matters, and to the people who sent us here ? I do not want detailed intervention in the day-to -day management of the Post Office--I recognise its need for commercial freedom--but it is providing a public service and we are entitled to demand minimum standards. I believe that the Government accept that, but they do not seem to accept the fundamental principle on which it should be based.

We do not favour over-tight regulation of the public sector, but we recognise that the public service must be accountable within the public sector. As the hon. Member for Gainsborough and Horncastle said, there is no difficulty in introducing commercial realism and allowing competition to develop in areas in which it can and should do so while at the same time maintaining proper public


Outright privatisation would not achieve that. Commercial freedom would. Selling some of the shares--especially to members of the work force, and perhaps more widely--may be a good option, and would provide a commercial test of the way in which the Post Office was operating. We as a party are prepared to consider that, but selling the majority of the shares removes the public accountability test, and on that count the Government's proposals fail.

6.28 pm

Mr. Douglas French (Gloucester) : I am interested in the long-term safety and security of Post Office jobs. I have a large regional sorting office in Gloucester, as well as many small post offices. Hundreds of my constituents depend on the Post Office for their livelihood, and I want to make sure that the jobs on which they depend are safe not only now but for the future.

I start my contribution with Eastern avenue, Gloucester, where the major regional sorting office is located. When one visits that sorting office, as I have on a number of occasions, the most striking things that one observes are, first, the employees' tremendous pride in the service that they are providing--it is an excellent work force which wishes to provide a first- class service and succeeds in doing so--and, secondly, the considerable investment that is taking place there.

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Particularly striking is the way in which new machinery, introduced for the better handling of letters, has, within two or three years, become out of date as a result of technological development. More mail is therefore being handled faster, and will continue to be handled faster, with a smaller work force as the technology of sorting equipment improves. The inevitable conclusion is that the improving technology of letter handling is likely, in the foreseeable future, substantially to reduce the job opportunities for sorters of mail and other manual operatives in sorting offices.

The first question that strikes me as being important, looking at the matter from the standpoint of local jobs, is whether anything can be done to prevent those otherwise certain job losses. Obviously, it is not possible to stop introducing new technological machinery. One cannot pretend that it has not been developed. However, it is possible to take steps to ensure that the volume of mail and the profit that it generates increases rather than falls.

Unfortunately, as several hon. Members have already said, the profitable part of Royal Mail is threatened in a number of respects. Several hon. Members have mentioned the Dutch post office. I am sorry that the hon. Member for Gordon (Mr. Bruce) has left the Chamber-- [Interruption.] I am pleased to see that the hon. Gentleman has come back at the right moment. I hope that he will forgive me if I update him on the position regarding the Dutch post office.

The Dutch post office, under the umbrella of KPN and embracing PTT Post and PTT Telecom, was partially privatised on 13 June. The hon. Gentleman may wish to know that that partial flotation proved extremely popular. It was three times oversubscribed with a strong demand from not only domestic but foreign investors. The KPN shares set a bourse record for volume with 35 million shares changing hands, more than half of which were sold to foreign institutions. About 20 per cent. were sold to buyers in Britain and 18 per cent. to buyers in the United States. That has left KPN in Holland embracing PTT Post as the third-largest quoted company on the Amsterdam bourse, preceded only by the Royal Dutch Shell group and Unilever. Not surprisingly, PTT issued a stamp to commemorate that important stage in its development.

I mention that because it demonstrates the tremendous confidence of not only the management of PTT but the public in Holland in the capacity of their post office to perform and serve not only the domestic market, but, most particularly, the international market in a way which makes it possible for it to lead the world in post office services.

Much reference has been made today to the sort of competition that Royal Mail potentially and actually faces from the Dutch post office. I shall give a few examples, because although it is all very well to talk of competition, we must understand what form that competition takes.

One of the most profitable sectors of Royal Mail business is bulk commercial business-to-business deliveries. The Dutch post office, with tremendous success, is bidding for bulk United Kingdom direct mail for destinations outside Holland and the United Kingdom. If it creams off business that would otherwise have gone through Royal Mail, Royal Mail and everyone who works for it is the loser because that business is lost to an alternative enterprise.

Secondly, the Dutch post office is bidding for bulk mail for destinations within the United Kingdom. There, it is important to appreciate the effect of the accounting conventions of the Universal Postal Union which militate

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against the Post Office that is doing the delivery. The revenue that is collected for a postal item, or in this case millions of postal items, is split, four fifths going to the country of origin--not the poster but the post office handling it--and one fifth going to the country that effects the delivery. When that business is lost, Royal Mail is saddled with the bulk of the work, because there is far more work to be done in delivering to individual destinations than in collecting, for only a fifth of the revenue.

Mr. Malcolm Bruce : The hon. Gentleman has just made a useful contribution to the debate. For those who have not been party to it, it explains what the competition is and the urgency for a response. The House should be grateful to the hon. Gentleman for that. I have no doubt that if the Post Office is privatised the share offer will be popular and I agree that it needs to be able to respond to the competition. However, that does not remove the fundamental point of principle as to whether that can be done within the public sector. It is important to underline that, although the Dutch post office has been partially privatised, it still is in the public sector and the Government have majority ownership. That is what we are advocating.

Mr. French : I shall come later to whether one can have commercial freedom in the public sector. But if one speaks to senior managers of PTT they will say that they have taken only the first step in the direction of selling the majority of shares. At the moment only a minority of shares has been sold, but eventually it is expected that the majority of shares will be in public ownership.

Mr. McLoughlin : My hon. Friend is on to an important point. The hon. Member for Gordon (Mr. Bruce) referred to the privatisation of the Post Office, but my hon. Friend has usefully put it on the record that we are talking not just about the Dutch post office but its telecoms operation. That 30 per cent. flotation was a large one for that country.

Mr. French : I agree entirely with my hon. Friend.

Why is it that the Dutch post office can organise itself to win the sort of business that I have described ? First, it can quote commercial tariffs in a way that our Post Office cannot. All the special deals that come from Royal Mail are according to a pre-determined formula, as with Mailsort, where the price to be quoted is already fixed and the nature of the deal or the customer placing the business is not taken into account.

In contrast, the Dutch post office can come forward with specific tariffs for specific customers if it knows that it is in a competitive position and wants to win a particular piece of business. It can enter commercial alliances, as my hon. Friend the Member for Leeds, North-West (Dr. Hampson) mentioned. It can also embark on the provision of a combination of services, a point that my hon. Friend the Member for Leeds, North-West made clearly.

A typical example is the fulfilment of a total postal requirement : that is, the design and printing of a piece of direct mail ; the enclosing of that item in an envelope or wrapper ; the generation of the addresses to which it will go ; and the sharply negotiated transportation from A to B by the best means possible and therefore at the most competitive price. We must take notice of the fact that the Dutch post office can enter into joint ventures and alliances to achieve such services. It can compete on all those fronts, but the Royal Mail is left to compete only on sorting and

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delivery services. One can easily see that it will not be long before it is wiped off the postal market place for that type of business.

If there were a few more Opposition Members present, I would no doubt hear them argue that there is not much to worry about--foreign post offices do not have the right to deliver to United Kingdom addresses, which accounts for the bulk of Royal Mail business, because the Royal Mail retains its letter monopoly. That view, however, is misconceived. It presupposes that the sending of a letter or circular through the post is an irreplaceable and indispensable service and that it will always be needed. The same view was taken by stagecoach operators, who eventually found, to their cost, that they were wrong.

As a medium of communication of information, the written or printed piece of paper that is delivered from door to door faces strong challenges. Other hon. Members have referred to fact that the fax is creaming off some of the business, as is the telephone. British Telecom's recent advertisement campaign highlighted the amount of telephone time that one can buy for the price of a postage stamp. Such competition--one medium competing with another--will increase and the Royal Mail must be able to respond to it.

It does not stop with the fax or telephone. More sophisticated forms of communication such as electronic mail, airwaves, telematics, satellite communications and other forms of data transmission are potential competitors for the humble letter going through the post.

Mr. Cousins : I am following the hon. Gentleman's argument closely and I agree with it. The Post Office says that 13 per cent. of that vital commercial market is under its control. If the competition is that severe, what is the economic and commercial basis of the guarantees that the Post Office, if it becomes a fully private company, will have a uniform price and universal delivery ?

Mr. French : Uniform price and universal delivery will be much more within the grasp of Royal Mail if the rest of its business is profitable. It will be more capable of delivering universality if it has commercial opportunities. The reality is the opposite of the arguments advanced by Labour Members today.

The trend is away from what many see as an archaic mode of communicating information whereby messages are transported from one side of the country to other, and from one side of the globe to the other, on pieces of paper. The Royal Mail's business is rooted in that function. Any long-term examination of its business position is bound to raise alarm bells as to where it will be, not in two years', but in 20 years' time, if action is not taken now.

The Post Office's only answer to those developments should be to achieve a position, first, whereby it can compete vigorously and effectively for its share of the postal market, whatever the size of that market will be ; and, secondly, whereby it can stake its claim for a proper share of those businesses that will inexorably nibble away at its current core activity. It must stake its claim to alternative means of communication.

That means that a measure of commercial freedom is vital. I have listened to the speeches of Opposition Members and I waited patiently to hear which Opposition Member would spell out what he meant by commercial freedom in the public sector. The hon. Member for Livingston (Mr. Cook) did not say how that could be

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achieved. He made only an assertion that it would be possible and that it could be done, but he did not tell us the means. The hon. Member for Vauxhall (Ms Hoey) said that the Post Office should be given more commercial freedom, but she did not explain how she proposed to do it.

My hon. Friend the Member for Macclesfield (Mr. Winterton) said that commercial freedom could be given without too many difficulties. Again, he did not tell us how he would achieve it. It was the same with the Liberal party spokesman, the hon. Member for Gordon (Mr. Bruce). He paid lip service to the desirability and possibility of commercial freedom without explaining how it could be achieved. Commercial freedom in the public sector is, for all practical purposes, a contradiction in terms. It cannot be achieved in the public sector. To achieve proper commercial freedom, the Post Office must have the opportunity to take proper risks. If it is still tied in some way to the public sector, it will not be able to take those commercial risks without, at some stage, the taxpayer having to underwrite the risk. I defy any Opposition Member to explain how it would be possible for the buck, ultimately, not to stop with the taxpayer and with the Treasury.

Commercialisation in the public sector would not work. My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) was emphatic that it would be irresponsible for the Treasury, if the Post Office were still in the public sector, not to maintain the system of the external financing limit and to take the cream off the profit, which it has done for so many years, in the interests of the taxpayer. It would also be irresponsible for the Department of Trade and Industry not to take an interest in the investment decisions in which the Post Office engaged. The DTI, the Treasury and the Government have an interest in preserving the best interests of the taxpayer and they could not do so in those circumstances.

Mr. Cousins : In many ways, I consider the issue to be the heart of the argument. How does the hon. Gentleman respond to the example of British Nuclear Fuels plc, which operates as a wholly publicly owned company ? How does he respond to the example of what are regarded as trading activities, which are regarded as contingent liabilities only for the public sector borrowing requirement and the public expenditure statements ?

Mr. French : I accept that those examples are departures from the broad principle, but they are not departures of the same type. We are dealing with a commercial enterprise of massive proportions. They are far greater than those in the examples that the hon. Member gave. We are dealing with commercial risks of enormous size. If they were not well judged, they could incur enormous losses for the taxpayer. The principles of public financial management and the responsibility of the Treasury to ensure that undue risks are not taken by commercial enterprises where the taxpayer has to pick up the bill must be adhered to and they should be adhered to in this case.

Mr. Oliver Heald (Hertfordshire, North) : Does my hon. Friend agree that, in terms of the scale of the business, British Gas offers a far better analogy ? It has been able to

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decrease its prices, to enter new world markets and, at the same time, to protect the taxpayer and customer through an extremely efficient regulator.

Mr. French : I entirely accept that ; I shall deal with the question of the regulator in a moment.

Mr. Peter Hain (Neath) : Will the hon. Gentleman give way ?

Mr. French : No ; other hon. Members wish to speak.

If the Government retained a majority shareholding, they would still ultimately be in control. Royal Mail borrowings would still be part of the public sector borrowing requirement. Even more important, the Government would have not only a right but a duty to interfere in any investment decisions that Royal Mail and the Post Office chose to make. That is a recipe for not giving the Post Office the commercial freedom that it needs.

The Post Office must be allowed to set its own financial targets, to make its own investment decisions and to raise capital in the market place when it considers it necessary for the development of its business. It is absurd that at present--even in the case of fairly trivial investment decisions-- the Post Office must approach a Government Department and, understandably, wait for some time to secure a decision that may not always be the one that it wanted. The Post Office should also be freed from the straitjacket of the external financing limit, and transferred to a normal corporation-tax system that will allow it to make a reasonable contribution to the Exchequer. It should not be hemmed in as it is now.

Mr. Clifton-Brown : Does my hon. Friend agree that an EFL of £230 million--nearly four times the size of the 1992 limit--is draining a successful Post Office of resources that it badly needs for reinvestment purposes ? Is not the desirability of access to the capital markets one of the main arguments for disposing of a large shareholding ?

Mr. French : I entirely agree. The EFL is far too high, and access to the capital markets will provide the Post Office with precisely the alternative facility that it needs.

The anxieties expressed by Opposition Members are reflected in the printed postcards that many hon. Members will have received from both Post Office employees and users of local post offices. Most of those anxieties could be fully dealt with by a regulator. Such a regulator could set the ground rules for a competitive framework, protect the social needs that have been correctly emphasised, protect user interests, enforce universality and the uniform tariff and deal with the scare identified by the hon. Member for Vauxhall (Ms Hoey)--the possible ending of the returned-letter service.

Mr. Peter Ainsworth : Would not consumers' interests be better looked after under a regulator than they are now ?

Mr. French : Yes, they would. The Post Office Users National Council currently does a very good job, but, although it tries to look after the consumer, its powers are ultimately limited. A regulator could ensure that the well-intentioned policies of such organisations were implemented : the legislation would give him teeth.

The Opposition have whipped up a good deal of anxiety. It is important for the future of the Post Office that they understand the arguments, which they have not done

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so far. As long as the current circumstances prevail, Royal Mail in particular is destined to lose business, and also to lose the opportunity to play its part in what could be an exciting expansion of the global market place.

The more far-sighted postal authorities see their opportunities to claim a slice of the new, larger cake. They perceive not only the possibilities for the domestic markets, but the possibility of co-operation between Post Offices in different countries to develop their businesses jointly. The chief executive of our Post Office has a very enlightened approach, but so have others.

Theo Jongsma, managing director of PTT Post International, said in London on 21 June :

"I support the privatisation of postal companies worldwide." He did not just want privatisation for Holland ; he saw its merits generally. He continued :

"The Dutch experience has been and will continue to be a success. I sincerely hope that other governments will give their postal companies the opportunity to develop as normal businesses, in a competitive environment."

The Dutch post office, however, is not alone. Also on 21 June and also in London, Dr. Klaus Zumwinkel, chief executive officer of PostDienst in Germany, said :

"There is a clear international trend towards liberalisation, deregulation and privatisation. No country can avoid this trend. The plan to convert the 3 Deutsche Bundespost companies into stock corporations is the only correct and viable approach to take." The same philosophy is embraced in Sweden. Since 1985, Sweden Post has been able to make free use of its profits and has had full power over its investment decisions. It is not yet a private company, but the pronouncements of its chief executive make it clear that it is destined to be one in the not too distant future.

I believe that the future of our postal services will involve the emergence of a few global postal operators with a command of both national and international opportunities, and a command of written and electronic information and goods such as we have not seen before. There will be vigorous competition, but the strong operators will do extremely well : it is therefore vital for Royal Mail to be there, among the leaders.

Let me return to the point at which I began. I have no doubt that the jobs of my local postal workers in the sorting office in Eastern avenue in Gloucester--and those in other sorting offices throughout the country, as well as in sub-post offices--will be safest if the opportunity for change is embraced, and Royal Mail becomes the world player that it should be. Jobs will be more secure, and employees will share in the growth of the business.

6.58 pm

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