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Mr. Geraint Davies: Does the hon. Gentleman accept that the regulators are accountable to the Public Accounts Committee?

Dr. Cable: They may be accountable to the PAC, but, as I have just said, there are many aspects of utilities regulation which are not covered by such concern for the legitimate use of public accounts. The wide-ranging aspects of such regulation would be properly covered by different Select Committees, with their different specialisms. We can have such a technical argument when the Bill is before us. There are other and better methods of scrutiny.

The proposals on the Post Office promise to be the most contentious part of the Government's programme. Certainly, as the proposed legislation stands, we shall oppose it unless we receive substantial reassurances.

The Post Office clearly has a problem--I think that we all agree on that--because it faces intensifying competition, notably from e-mail, and its finances are severely constrained by the Treasury. I gather that, until recently, up to 80 per cent. of its profits were clawed back by the Treasury in one way or another. It is not able to sustain a regular investment programme, nor its valuable network of rural and other offices.

What should be done about the Post Office's difficulties? The Government must explain why their original and plausible proposal to make it an independent publicly owned corporation no longer finds favour. The argument overlaps with the debate about London's tube system, and there may be a good reason why that model will not work. However, why have the Government changed their proposal, and why do they now propose to make the Post Office a public limited company instead?

One suspicion is that the new proposal will allow shares to be sold, thus enabling the Treasury to top up its war chest when it becomes depleted--in other words, that the requirement is driven by the Treasury rather than by business.

The other suspicion was made explicit earlier in this morning's debate, and it is that the proposal is a prelude to privatisation. My attitude to privatisation is pragmatic: it has worked well in many instances, but badly in some. Its failures have been especially notable where networks are involved, and the Railtrack system is the glaring example of that.

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Any proposal that made privatisation of the Post Office network more likely would have to be argued very persuasively. One person who would have to be converted would be the former Prime Minister, Baroness Thatcher, who I recall had enormous reservations about it.

A second key issue has to do with timing. The automated platform for the Post Office will be fed in to compensate for the loss of revenue from benefit work. If that is badly managed, enormous damage could be done to the Post Office system.

Another important factor would be the mechanism to ensure the maintenance of the system of sub-post offices, which benefits people all over the country, in both suburbs and countryside. There must be a proper system to evaluate any closure that is proposed.

I hope that the Bill concerning the Post Office will deal with those fundamental questions. Liberal Democrat Members consider that much of the rhetoric of the Government's programme is attractive, as far as it goes, but that there could be many problems in the small print. Many of the proposals will go through Parliament largely uncontentiously, but some will have to be opposed. We shall play our part in that.

12.7 pm

Mr. Geraint Davies (Croydon, Central): I add my congratulations to Cherie Blair and the impending new labour that she and my right hon. Friend the Prime Minister are about to enjoy. That is great news, and I am sure that all hon. Members will join me in extending good wishes to them both.

I take great pleasure today in supporting the Gracious Speech, and the themes of enterprise and fairness that it contains. I am also pleased that the debate today combines the concerns of trade and industry and of social security.

The first condition for economic success and therefore social investment is economic stability, which has been established already through the independence given to the Bank of England. However, the comments of the hon. Member for Tiverton and Honiton (Mrs. Browning) emphasised how unclear is the Opposition's attitude to the Bank of England's independence. The common-sense revolution now appears to mean no more than preserving the right to change one's mind about matters. The hon. Lady made it clear that what the Opposition oppose today, they may support tomorrow.

It is not possible to take the hon. Member for Tiverton and Honiton or her party seriously on that or many other issues, including Post Office privatisation. The general public will not understand the position of the Conservative party, although people will know that the Government's decision to make the Bank of England independent was the first step towards providing the economic stability that, among other things, has given employment to an extra 700,000 people. It now pays to work, thanks to the working families tax credit and the minimum wage.

It was noticeable that the Leader of the Opposition, in responding to the Gracious Speech, promised to turn to the economy "in a minute", but then never did. That illustrates that the Opposition have no idea of how to improve the country's economic performance so that the proceeds can be reinvested in our social infrastructure.

The Government have been in power for only two and a half years but the fruits of success are already emerging. The Opposition have described the extra £40 billion to be

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invested in health and education as reckless and irresponsible. They are now wondering whether to eat their words, and wondering how to square the circle of the common-sense revolution, which commits them to continuous cuts in taxation and therefore, according to the previous Prime Minister, swingeing cuts in public expenditure.

The Queen's Speech contains a good combination of measures to help families and to help industry. The Child Support Agency has been mentioned. As a member of the Public Accounts Committee, I am glad that we are moving towards a simple percentage formula--something that I recommended a couple of years back. That is obviously a cruder method, but we must deal with the legacy of the CSA, where 85 per cent. of assessments are incorrect and 66 per cent. of the money due is not paid.

I welcome the new approach, and alongside it, the new commitment to a second state pension, a stakeholder pension and, at the top of the age scale, the minimum income guarantee for the poorest pensioners. That begins to develop a sophisticated approach, targeting public resources at the people most in need.

Economic stability is important, and many of the Bills before us will form the building blocks for trade and industry success. The Electronic Communications Bill, as has already been said, has been applauded by Bill Gates. Developments in e-commerce will, I believe, be much quicker than many people anticipate, and will have profound implications for transport planning, environmental issues and industrial issues.

More and more people may choose not to live in the south-east and not to commute to offices, but to work from home instead. The implications for society's infrastructure must be factored into our decisions.

I welcome the range of Bills, including the insolvency Bill, the Companies House Bill and the limited liability partnership Bill, which will help small businesses, among others, to operate more flexibly and more effectively. The Government must take account of the views of small businesses in all sectors of the industrial community, as they do not have the same interests as big business, which will want more regulation to be introduced to squeeze out competition and innovation in the small niche business sector, in which big business finds it so difficult to compete as it stomps around in the marketplace.

I welcome the move towards greater commercial flexibility for the Post Office, accompanied by a guarantee to customers of network provision and a limited risk approach by the Government to the commercialisation package. I do not agree with comments from the Opposition that wholesale privatisation is the way forward.

One of the examples mentioned was Railfreight. Market expectations were that more freight would move to rail, as any Government would inevitably have to limit road growth. Freight was therefore expected to become an increasingly profitable area within the limited confines of transport opportunities, but the previous Government simply gave away Railfreight and

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£250 million in public money. That was outrageous, and almost as bad as the case of Railtrack, which was sold for £1.9 billion and is now worth £8 billion.

Mr. Robert Syms (Poole): Does the hon. Gentleman accept that people who purchased shares did so in the knowledge that the Labour party would re-nationalise the industry--in other words, there was a degree of risk--and that the position of the Labour party at that time may well have depressed the share price?

Mr. Davies: I am extremely grateful for that intervention, which underlines the appalling action of the previous Government in selling off Government assets, as the hon. Gentleman acknowledged, at the depths of the market. Any responsible Government who were ideologically committed to selling off national assets should have had faith that the public would vote them back in--of course, they did not--in order for the Government to sell those assets at a premium price, which they did not. It was a case of a losing party deciding to spend public money in a disgraceful scorched-earth strategy.

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