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12.20 pm

The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): I listened with a great deal of interest, and sometimes amusement, to the points that my hon. Friend the Member for Thurrock (Mr. Mackinlay) made. He described himself as cussed and difficult, and took the opportunity to "bounce ideas" around the Chamber. He can tell his friend and ministerial colleague whom he did not identify that, although he may not have had the opportunity to enjoy trips abroad with the Foreign Affairs Select Committee, he certainly enjoyed himself today. The entire Chamber enjoyed his speech.

Many points were made during the debate and I shall try to answer some of them. I shall reflect on the others, but, as the House knows, the issue concerns the House as well as the Government. I expect those hon. Members with more experience than I, who have powerful voices and positions, to continue this debate elsewhere in the Palace of Westminster. Many themes emerged and I shall discuss three of those before coming to the specific points.

First, strong support was expressed on both sides of the Chamber for the Select Committee system. Everyone believes that it has a strong foundation and no one advocated major change. Hon. Members want to improve

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the system and many suggestions were made about how to go about that. The system is not static--it has changed and it will continue to change. The mood of the House today reflects a desire to see quicker change. Let me reflect on two or three changes.

Within this Parliament, the Select Committee structure has been changed slightly to mirror the new departmental structures. An Environmental Audit Committee has been set up and, importantly, a new Human Rights Committee will soon be set up to monitor new legislation. The big change, which no one has mentioned in great depth this morning, is the move to encourage and enable Select Committees to carry out pre-legislative scrutiny. Someone said that the Social Security Committee had looked at the pensions splitting on divorce Bill. There will shortly be opportunities for Select Committees to examine, for example, the new food standards agency. As the hon. Member for Sheffield, Hallam (Mr. Allan) knows, a Committee will also have opportunities to look at asylum and immigration procedures, and I hope that he will be involved. Inevitably, that pre-legislative scrutiny will lead to changes in Select Committee structure.

Secondly, I was slightly amused at the discussion about the need for bipartisanship. The House is very much into pantomime and yah-boo politics. I thought that I heard an increasing echo of people saying that they wanted a new consensual approach to politics--[Hon. Members: "No."] When hon. Members are challenged with that, their voices change, but I had the impression that hon. Members were saying that bipartisanship should be encouraged.

Thirdly and most importantly, hon. Members were conscious of the importance of creative tension between Back Benchers and the Select Committee system, and the Government. We can all benefit from that creative tension. There is nothing to be frightened about. I hope that the call for greater openness expressed in the Chamber this morning will be heard. Greater openness is one of the Government's aims.

A number of specific points have been made and I shall deal with two or three of them. A strong call was made for greater status for Select Committee reports, members and Chairmen. Like many other hon. Members, I listen regularly to the "Today" programme and I have reached the conclusion that the Chairman of the Foreign Affairs Committee is in residence there. He is there almost every day because he pursues the Select Committee's line. His status arises from the Select Committee's achievements. We need to back Select Committees and ensure that their status arises from their achievements.

Extra resources for Select Committees were called for. Ultimately, that is a matter for the House of Commons Commission, with which some hon. Members present today are involved, but extra resources have been made available in the past. I understand that resources are available, but, as my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said, there is never a difficulty in getting specialist advisers because it is regarded as an honour to work for a Select Committee. However, there may be a case for looking again at the issue of special assistants who advise Select Committees.

I want to spend a few minutes discussing the points made by the Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), and his predecessor about expenditure. In a sense, my right hon. Friend the Member for

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Ashton-under-Lyne partly wound up the debate. He stressed that, with imagination, Select Committees could do many things and that in many ways they were not constrained. I hope that Select Committees will take a longer look at expenditure. I agree entirely with the right hon. Member for Haltemprice and Howden that much more needs to be done to make the Executive accountable for their expenditure. Resource accounting will help, as will a measurement of output and a focus on input. However, I see no reason why Select Committees should not be able to call Ministers before them and examine the issues that he discussed.

I am conscious that I have very little time in which to respond, so I shall discuss just two other issues. The first is the need to ensure that evidence is available quickly, not just to hon. Members, but to the wider public. There is a case for quicker production of reports and, in extreme cases, evidence can be made available quickly. Furthermore, when Select Committees are recorded and videoed, a tape can be produced immediately. However, the use of new technology should be explored to ensure that evidence is available quickly.

Secondly, my hon. Friend the Member for Thurrock mentioned witnesses giving evidence on oath. We must bear it in mind that appearing before a Select Committee is difficult. Ministers are grilled, but people from the outside are grilled too and we must be careful how we handle those people.

I am conscious that I have made no specific pledges, but I hope that the tone of my remarks is sympathetic. I shall ensure that hon. Members' comments are made available to a wider audience. Change has occurred and will occur, and I hope that we shall establish a system in which the whole House feels that Select Committee views are heard.

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Post Office

12.30 pm

Mr. Richard Page (South-West Hertfordshire): I am grateful for this opportunity to raise the subject of the Post Office. I have regularly submitted my name in the ballot for the past three months on this item, so I am obviously very pleased to have secured a place in today's Adjournment debates. It is particularly apposite because the Select Committee on Trade and Industry reported on Monday and, this week, the Post Office has made an important overseas purchase, on which I shall touch later.

The Post Office is an important and massive business. We must remind ourselves time and again that, through its four main operations--the Royal Mail, Parcelforce, Post Office Counters Ltd. and Subscription Services Ltd.--it employs 190,000 people and has a turnover in excess of £6.7 billion. It is facing increasing, serious competition from overseas rivals, as well as pressures from the growth of fax and electronic mail services. There is also the prospect of greater liberalisation through the European Union.

To me and several others, it has been clear for some time that such a situation could not be maintained indefinitely without losing market share--notwithstanding the announcement by the previous Secretary of State for Trade and Industry, the right hon. Member for Hartlepool (Mr. Mandelson), just before Christmas. A publicly owned and financed business that is subject to all the traditional constraints on pay, pricing, acquisitions, borrowing, partnerships and joint ventures has become increasingly at odds with the commercial world.

As the previous Secretary of State announced just before Christmas, postal administrations in countries such as Denmark, Germany, the Netherlands, New Zealand and Switzerland are already benefiting from much greater commercial freedom. The Dutch postal business, KPN, has bought the private sector carrier TNT, which operates in this country and throughout the world, for the massive sum of 2 billion Australian dollars. Such sums will be necessary if we are to create a world player in our Post Office. The German post office has bought a 20 per cent. share in DHL, for which it also paid a substantial sum.

In both the Netherlands and Germany, and in France, the machinery and rules of the European Union are being used to strengthen their postal organisations before they are fully or partially privatised. It is certain that, when the European Union directive on postal markets starts to work fully, direct mail and cross-border services will be open to more direct competition. Unless we are very careful, our rivals will be better placed to utilise and take advantage of it.

It is with regret that I say that the previous Government did not reach a final conclusion on these challenges. I felt at times that they should have gone much further, although I plead in mitigation the obvious lack of a substantial parliamentary majority. This Government cannot plead that. The decisions announced in the House by the former Secretary of State on 7 December 1998 show that the Government are fundamentally divided on the way in which to proceed. Signs of a major quarrel between the Treasury and the Department of Trade and Industry were all over his statement. The

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    that he announced, in which a minority shareholding in a prospective public limited company can be sold, and which allows for an exchange of equity with other businesses, is a slogan, not a solution. As the Communications Workers Union pointed out in September,

    "a minority share sale would amount to privatisation for all practical purposes".

It would have been far better to acknowledge that outright last month and to follow the union's logic, instead of cobbling together yet another policy fudge.

I understand why the former Secretary of State could not do so. With the Chancellor to his left, the former Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson), to his right and Charlie Whelan ahead of him, it would have been the political equivalent of the charge of the Light Brigade. But the political landscape has changed; the Government have suffered a few casualties, and the new Secretary of State has only the wounded figure of the Chancellor of the Exchequer to tackle.

If rumour is right, the new Secretary of State is looking over this terrain again before the publication of the forthcoming White Paper. That is one of the reasons why I was so pleased to be able to secure today's debate. I hope that the White Paper will address the questions raised in the Select Committee report on the degree of control that the DTI will have over Post Office borrowing and the scale envisaged.

All that is second best to my principal hope that the new Secretary of State, unlike his predecessor, will have the courage to accept that the only way in which our Post Office will compete effectively with its European and global rivals is to set it free--just as the previous Government had the courage to set free British Telecom--to transform itself from a national player to a major contender on the world stage, just as BT has done.

I shall give a few simple examples of the problems facing our Post Office and what the Government's policies will entail if they remain unchanged. On Monday, the Post Office purchased the German Parcel Company, the third largest carrier in the Federal Republic, which has annual sales of £250 million. We do not know what the Post Office paid for it--it wants the matter to remain commercially confidential--although estimates in the press range from £200 million to £300 million.

Even with the reduction of the Government's dividend from Post Office profits from an average of 80 per cent. in recent years to 40 per cent., which I welcome, such a transaction will inevitably affect the Post Office's capacity to invest in its automation and development programme--unless, of course, the money comes directly from the Treasury. We do not know whether that will be so. If such sums come directly from the Treasury, we must ask about accountability. We might ask what other sums are earmarked for future purchases. To operate in such a way is a recipe for confusion. Let us not forget that the purchase, which I welcome and on which I congratulate the Post Office, is only the start of creating a world-class, worldwide postal business. Entrees into the Spains, Italys and Frances of this world must be found and funded. That is when we shall start to talk about serious sums of money.

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I remember being in the House when, before BT was privatised, it announced that it wanted £2 billion for an investment programme. We ran around in circles trying to facilitate that within Treasury rules. There was talk of Busby bonds, and all sorts of alternatives were examined. At the end of the day, the only way that BT could get its money for expansion was through privatisation.

Private companies operating within national borders will be purchased at an increasing premium as major players strive for world positions. To put it bluntly, it will get harder and harder for the Post Office to make further acquisitions under the rules of external financing that were announced in December. Internally, Post Office revenues will fall by several millions of pounds when the adjustment to the Rheims agreement is made. I shall not go into the details of the Rheims agreement suffice it to say that it is an arcane form of internal and exterior movements of mail. It boils down to--the figure is from two years ago--the enhancement of the Royal Mail's profits by £40 million. Following the adjustment, we shall lose that amount, and probably more. All that will restrict the Post Office's ability to expand.

Anyone discussing the commercial freedom or privatisation of the Post Office is told that such moves would put daily deliveries at risk throughout the country, that it would affect the universal price for letters and that the network of rural post offices would face extinction. I do not believe that. We heard exactly the same alarmist scare stories from the same sources when BT was privatised. Were we not told that prices would soar, and that country telephone boxes would go? What do we have now? We have more telephone boxes, new operators and competing services--which benefit the public, as consumers, more than ever before--along with much lower prices.

I believe that greater freedom--indeed, privatisation, with the spur of competition from other providers--will bring comparable gains to our Post Office. At the same time--and this is the underlying raison d'etre of all that I am saying--it will bring about the creation of our Post Office as a world player. I think that, if the right measures are adopted, that can be achieved alongside the maintenance of a nationwide postal service. I am not here to outline Conservative party policy, but I am sure that Conservative Members are as committed as anyone to a universal service and to sustaining a viable network of rural post offices, whatever method of privatisation may be employed.

Inevitably, there will be changes in the location and number of post offices. Although 28 million people use rural post offices every week, the number in operation has fallen from 20,000 to 18,000 in the past few years. It is a brutal commercial fact of life that a minimum amount of business must be done in a post office if it is to be viable, and that minimum rises every year. New policies must be devised if the sub-post office is to give its postmaster or postmistress a decent living, and also provide the local community with a wide range of services. I know that the aim of the sub-post office movement is the creation of a bank in every village, and I want that as well.

I would be more confident about the Government's assurances to sub-post office operators last month had they not so far failed to commit themselves to the Horizon platform for automation. Perhaps the Minister will announce such a commitment today; if he does, I shall be delighted. If he says that the last Government made no

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such commitment, I shall roll over and say that I entirely agree. The fact is, however, that no one wants a future of indefinitely diminishing returns and ever-lengthening hours for the operators of sub-post offices, but, unless changes are made, that is a real danger.

The prospect of a Post Office obliged to submit its strategic plans to the Department of Trade and Industry, subject to Treasury approval for its borrowing to finance new investment and operating without "undue cross-subsidy"--whatever that delicate phrase means--between Royal Mail and Parcelforce, with employees paid within the necessary context of public-sector pay policies, is frankly disappointing. It constitutes a return to the way in which the state-owned organisation was run in the past, and from that it will be only a short step to the lunchtime directive. It represents a false and not a new dawn. Realistically, can any hon. Member envisage the Treasury giving our Post Office enough money to purchase an organisation such as TNT? A purchase of that kind, however, is necessary if the Post Office is to move into the world market.

I see nothing wrong with an open and transparent accounting system, or an independent regulatory system to ensure standards of service and fair competition, and I know that that is what the private operators in the sector want. Without change, we shall have a Post Office with its hands tied behind its back, exposed to increasing competition, particularly from European postal organisations. I realise that the Minister cannot pre-empt the White Paper which I hope will soon be before us, but I hope he accepts that what I suggest would benefit the Post Office in the long term, and that the status quo is not a long-term option.

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