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Mr. Harvey: By any reckoning, that is totally ludicrous.
What sort of business anywhere, in any sector, in any country can expect the Government to take away from it at the end of a highly successful trading period a sum greater than the profit that it has made? That is utterly nonsensical, the desperate move of a Chancellor of the Exchequer who is in a tight financial corner and has decided to turn on the Post Office and raid its coffers.
Mr. Jenkin:
Of course the money that the Government plan to raise from the Post Office will be incorporated into their financial plan. Can we take it that the Liberal Democrats, who are famous for wanting to increase income tax, will apply that increase not to education, as they promised, but to replacing the revenue lost from the Post Office?
Mr. Harvey:
The hon. Gentleman should recognise that that is indeed, as the hon. Member for Dagenham(Ms Church) says, a tax. The Government are imposing on the Post Office such huge costs that it will have to levy more costs on the taxpayer, in the form of more expensive postage stamps. The whole gamut of its business will be there, and it will have to charge more. The hon. Gentleman's point--
Mr. Anthony Coombs (Wyre Forest)
rose--
Mr. Harvey:
I am still replying to the hon. Member for Colchester, North (Mr. Jenkin). If his argument is that we are trying to save the taxpayer from a great burden, he must realise that there are alternative ways in which to do that.
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Phillip Oppenheim):
If the money is, as the hon. Gentleman says, a tax, with what would his party replace that funding?
Mr. Harvey:
One draws up a budget for the entire year, and the Government have chosen to draw it up on that
On commercial freedom, how can the Government justify--
Mr. Jenkin:
Will the hon. Gentleman give way?
Mr. Harvey:
I have already given way to the hon. Gentleman.
How can the Government agree to the BBC's participating in just such joint ventures--in the past they have also allowed various parts of the nuclear industry to do so--yet for some reason find it total anathema to consider allowing the Post Office to do the same? Moreover, there is one crucial difference between the BBC and the Post Office--the Post Office is turning in a huge profit, which the Government are raiding for the sake of easing their predicament over the public sector borrowing requirement.
The threat of Post Office privatisation is real. The word "threat" is appropriate because by taking the profitable business away and so preventing cross-subsidy, the Government will put the rural sub-post office network under threat, and by allowing private operators to drive a coach and horses through the principles that have guided our Royal Mail network ever since its inception, they will threaten the universal mail coverage service.
Mr. Edward Leigh (Gainsborough and Horncastle):
May I comment briefly on the speech by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) before he leaves the Chamber? He made a most interesting point, with which I agree--that the public are concerned, and probably oppose Post Office privatisation. There is no doubt about that.
However, the right hon. Gentleman recognises that many of our privatisations have been successful over the years, although the public opposed every one of them beforehand, and while they were going through. The public are naturally concerned about change. However, the fact that the public are concerned does not mean that we should immobilise our policy. We have to consider the economic reality.
This is an example of an issue in which political sentiment flies in the face of commercial reality. The Post Office is a commercial organisation. We simply cannot give it the commercial freedom that it needs if we retain it in the public sector. The right hon. Member for Derby,
South (Mrs. Beckett) asked me a fair question--whether I approved of the Government's using the Post Office as a milch cow. I am not a Member of the Government,so I have a certain freedom in what I can say in the Chamber. I do not approve of the Government's doing that, but I do not believe that we could expect better from any other Government. We certainly did not expect better from Labour Governments in the past, nor could we do so in the future.
Ms Church:
Will the hon. Gentleman give way?
Mr. Leigh:
I shall give way later, but first I want to develop my argument.
One of the most interesting features of the debate was that when I asked the simple question whether the right hon. Lady would limit the external financing limit to halve the profits of the Post Office, she could not answer. Of course she could not. We well know that a Labour Government, like any other Government, will be strapped for cash, and will use the Post Office as a milch cow so long as it remains in the public sector.
I am sorry to say that the speech by the Liberal spokesman, the hon. Member for North Devon(Mr. Harvey), was utterly illogical. Would he really increase income tax to cut the price of a stamp? That seemed to be what he was suggesting.
Mr. Harvey:
May I ask the hon. Gentleman exactly the same question? He has told us that he does not approve of the Government's using the Post Office as a milch cow. Can I ask him what the hon. Member for Colchester, North (Mr. Jenkin) asked me? How would he replace the revenue? Is he not arguing against his own case?
Mr. Leigh:
I am delighted, because the hon. Gentleman has led with his chin and made precisely the point that I was about to make. I would privatise the Post Office.We should not be running it. That is the simple answer; that is the commercial reality. It is nonsense to suggest that what the hon. Gentleman says can apply to a successful commercial organisation. The Post Office is becoming more and more commercial. Even its brochures say things such as:
The whole tenor of that is not that the Post Office is a public service, but that it is a highly commercial company operating in the real business world.
The Post Office makes huge profits because it has a monopoly. It delivers the 67 million letters every working day that its propaganda tells us about--and good luck to it.
Mr. Leigh:
I shall give way to the hon. Lady in a moment, but I want to answer the question first.
The Post Office is a commercial organisation, and it will make huge profits because it is a monopoly. It can hardly fail to do so. So long as it makes profits the Government, rightly, will view it as an alternative means of taxation. That is the real world in which we live, and there is no point in denying it.
My hon. Friend the Member for Colchester, North made a good point about that. I have received a communication from DHL (UK) International Ltd.,a successful private company that deals with parcels. Talking about VAT, the document rightly says:
One could mention 101 other examples, if one wanted to. My hon. Friend and others asked the question strongly: is it fair for a company wholly owned by the public sector and entirely buttressed by it, with a monopoly, to compete unfairly with the private sector because it has full commercial freedom and can do whatever it likes?
Ms Church:
Perhaps the hon. Gentleman would like to inform us what proportion of DHL's profits are paid into the public purse, in contrast to the percentage of Post Office profits that are currently bailing out the Treasury from its economic mess.
Mr. Leigh:
I am sorry, but that is not the point that I was making. DHL pays corporation tax, like any other business. If we privatised the Post Office it would pay corporation tax. It would be a highly successful company and would yield at least £2 billion or £3 billion on privatisation, which could be used to build hospitals or whatever we liked. It would be able to operate globally in the world marketplace, pay its corporation tax and do all that it could possibly want. But it would not be competing unfairly with the private sector--nor would it be held back.
Those of us who try to run the Post Office in the public sector, as I have done, and as my hon. Friend the Under-Secretary of State for Trade and Industry is now doing, have found that one of the main problems involved is that the postmasters, about whom we have heard so much, keep coming to us and saying, "We can't compete. Give us more power."
The Treasury is right to say to Department of Trade and Industry officials that the Post Office cannot be given more powers because it is in the public sector and unfair competition would result. I understand the Treasury's arguments. We are therefore considering a decline in business. As long as the Post Office is kept in the public sector, regardless of who is in control in this House, the Treasury will prevent sub-post offices and post offices from competing unfairly with the private sector. That is the economic reality that we face.
The only way to solve the problem is to push the Post Office out into the private sector and allow it to deliver the kind of service that it wants. The Royal Mail would be allowed to become a modern communications company, break into the new electronic age and compete on a level playing field with other companies. Post Office Counters would be able to compete, and build itself up by establishing local financial centres in towns and villages where it could deliver the services that it liked. As long as the Post Office is shackled to the public sector it will be used as a milch cow and will not grow.
We face a political problem, as my right hon. Friend the Member for Old Bexley and Sidcup rightly underlined. [Laughter.] There is no point in Opposition Members
laughing. There is a political problem; people are worried about change. As we well know, there is no overwhelming public demand for the Post Office to be privatised, any more than there was for any industry to be privatised. The Government must therefore think of ways in which to achieve Post Office privatisation.
One of the ways in which the Post Office could be privatised--I do not know why the Government have not done it during the past couple of years--is to make it a public limited company before the general election, selling, say, 15 per cent. of the shares to the work force, 15 per cent. to the general public, 15 per cent. to city institutions and retaining about 55 per cent. in Government control.
I have no doubt that such a measure could have got through Parliament. Although some Conservative Members are--apparently--opposed to Post Office privatisation, I would have thought that every sensible person would allow it to become a public limited company despite the fact that there is not a majority in the House in favour of it becoming a plc and 51 per cent. of it being owned by the private sector. We could have at least moved down that road. That would have been a sensible halfway step. In our next manifesto we should promise that we will sell 51 per cent. of the shares.
When the right hon. Member for St. Albans(Mr. Lilley) was Secretary of State for Trade and Industry, I tried to persuade him to put the proposal in our previous manifesto, but it was early days and I did not succeed.If there had been a line in our previous manifesto stating that we were to privatise the Post Office, I doubt that it would have lost us a single vote. I do not think that when the public vote--whether they vote Conservative or Labour--they are really concerned about items in a manifesto that state that the Government are or are not planning to privatise the Post Office, as long as the policy is explained. We could have done it, we should have done it and we will have to do it in the end because we certainly cannot leave things as they are for the reasons that I have given.
Whatever the hon. Member for North Devon says, the Post Office is very different from the BBC. There is no point in comparing them and saying that the BBC is owned in the public sector but has full commercial freedom. It is a completely different organisation. The Post Office is a modern, commercial company. There is nothing very romantic about delivering pieces of paper around the country. The overwhelming volume of that paper comprises not letters from old grannies to their nephews, but correspondence from business to business and business to people. It is virtually an entirely straight commercial operation. Apart from political sensitivity, there is absolutely no reason why that business should not be privatised tomorrow.
"European postal administrations are now able to operate much more commercially and are making the most of their new status. Success in the future will go to those communications companies who can operate globally".
"Many of the premium services currently offered by the Post Office are in direct competition with the express distribution industry and yet are still classed as VAT exempt, while DHL has to charge VAT. Consequently, DHL is prejudiced in its ability to compete on price with the Post Office".
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