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Postal Rates (Overseas Services)

Volume 885: debated on Thursday 30 January 1975

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11.53 p.m.

We have had prices this afternoon. We have had prices all evening. I fear that for the last half hour of the evening we shall be having prices again.

Perhaps I should start by declaring an interest. I have no proprietorial interest in any publication, but from time to time I turn an honest penny by writing articles in various publications, and the New Statesman in particular.

First, although the form in which I have put down the debate is limited, this should not be taken to mean in any way that I am satisfied with other unsatisfactory aspects of this situation, particularly the home postal rates and the rates for matter that goes through the post other than books and periodicals. It is simply that I felt very strongly about the overseas rate and its effect on our export trade, particularly in periodicals and books, which will be most seriously affected by the increases in charges. It is on that matter that we should concentrate tonight.

I also realise and recognise that the mess we are in is largely due to what I might call the "Healey instruction"—the instruction that all public enterprises and the nationalised industries should, in one way or another, pay their way. Time was when Labour Members talked about Socialism being the language of priorities. Time was when our Prime Minister drew distinctions between the sledgehammer and the surgeon's knife. I fear that what we are having now in this blanket instruction to nationalised industries to produce a return on capital, irrespective of the trade and social effects of that instruction, is a massive sledgehammer which may cause grave damage in particular areas.

I want to sound three warnings about what this prospective increase in postal charges will do and to suggest a way out of the impasse. I am pleased to see that both my hon. Friend the Under-Secretary of State for Trade and my hon. Friend the Under-Secretary of State for Industry are here. When I receive letters from the two Departments I see that they do not yet have their own notepaper. If the letter is from the Department of Trade the reference in the heading to Industry is crossed out, and vice versa. I am glad that both my hon. Friends are here, because they are equally affected by this subject.

I wish to make three points. First, the periodical and book industry is an absolutely vital part of Britain's export trade. Secondly, the survival of many of these periodicals is crucial to the Labour Party's policy and we have made a great deal of fuss about that in the past. Thirdly, there are real dangers of redundancy and a reduced use of the postal service with the increase in charges that is proposed.

In 1974 the book industry earned £175 million for Britain—1½ per cent. of our total foreign currency earnings. It is fighting in the export trade with one hand tied behind its back, and the situation is getting worse. The cost of sending books and periodicals overseas through the post is calculated at 8 per cent. of invoice value. The new cost in the United Kingdom as a result of the proposed charges will be 14 per cent. of invoice value. If the charges announced to start in January 1976 go ahead, that will rise to 30 per cent. It will make this very keen export trade almost impossible to sustain in many respects.

This problem was drawn to my attention by a company in my constituency which moved from the City of London in order to reduce its costs. The managing director has written to me saying that
"Our journals are in the main concerned with engineering and allied subjects, paid for by annual subscription in advance. It is not possible therefore to pass the increases on retrospectively."
he wrote
"This increase is of such a serious magnitude as to cause my Board of Directors to give serious and immediate consideration to the termination of a number of titles."
I am sure that the magazine on aircraft engineering is a unique publication. If it goes out of publication in Britain it may be taken over by the Americans, but it may be taken over by nobody, and this quite unique service will be lost to the industry. Therefore, from the export point of view, this is a crucial issue.

I come to a group of periodicals of which the New Statesman is one. The increase in overseas postal charges has been announced as 54 per cent. It was to have been 100 per cent., but it has been reduced. However, the 54 per cent. covers a multitude of percentages for different weights. Those periodicals with the least advertising—that is, the lightest periodicals—in the 2 oz to 7 oz weight band, are hit hardest, with a 71 per cent. increase. That means that those least able to defend themselves are hit hardest.

It is the Labour Party policy to try to maintain minority publications. In this week's New Statesman there is an article by the editor saying:
"Indeed Mr. Benn himself, who as Secretary of State for Industry sanctioned the latest round of postal increases, not so long ago put his name to a document that roundly condemned the present trade distribution arrangements for restricted circulation publications, as amounting to 'a form of censorship'. Maybe so—but hardly as effective 'a form of censorship' as the proposed rise in the postal tariff is likely to be for a whole host of small publications desperately trying to keep the minorities' flag flying in what has become an 'admass' market. In the case of the New Statesman, almost a quarter of whose copies go out each week by post, our new post office bill (even after the trifling temporary concession on the overseas surface rate) is likely to add nearly £20,000 a year to our costs."
It may seem to be special pleading, but it is special pleading that I am entitled to make. In fact, such figures apply to a whole host of other publications, trade and technical, as well as political.

My third point concerns redundancy. If many of these publications cease, it will add to the redundancies that we are liable to have over the next few months. Both SOGAT and ASTMS have made strong protests about the matter, and many publishers are considering means other than the Post Office to distribute magazines. In the long run this can do the Post Office no good.

For the rest of the time available to me I should like to be constructive. I think that there is a way out of the apparent impasse. After representations were received the Post Office made the reduction from 100 per cent. to an average of 54 per cent. for the calendar year 1975. That was through no tenderness towards the periodicals, but because it was pointed out that the prospective increases wildly over-stretched the UPU guidelines for overseas rates.

There is a difficulty here, but there is a way out. The Post Office is in a serious difficulty because of the new imbalance charges placed on it as a result of the Lausanne Convention. Instead of having to pay £2·8 million in imbalance charges, it faces a bill of £10·7 million. The Post Office must find almost £8 million extra. We must become used to this, because it is a Third World revolt, similar to the oil price situation. The countries which handle lots of incoming mail and very little outgoing mail will make it clear during the coming years that they want compensation for this disparity. The UPU regulations specifically allow compensation for that. That is why I am so pleased to see a representative of the Department of Trade on the Front Bench.

It will be right for the Department of Trade, in considering its responsibility for export promotion, to make some contribution—not a subsidy in the proper sense of the word—to the Post Office to cover the very wide imbalance charges. Britain will be faced with a heavier burden of imbalance charges than any other country. We are in the awkward position of being a small country which accepts a much narrower rôle in the world, but of having responsibility for a world-wide language. It is a responsibility that we must face squarely and take openly.

It would be a terrible tragedy if a blind obsession with the Chancellor's rules about public sector accounting were to produce a situation in which our English language publications were to be lost, one after another—some to the Americans and some to other countries, which are increasingly publishing and pirating English language publications. I hope that I have made out a case that this is a special export problem, connected with our world rôle as the mother country of the English language.

I hope that both my hon. Friends on the Front Bench, having listened to this case carefully, will take the problem seriously and propose some sort of subsidy, so that at the very least the 1976 increases, which will otherwise be severe—the present increases are crippling enough—will be held down substantially.

12.8 a.m.

The Opposition welcome very much the choice by the hon. Member for Lewisham, West (Mr. Price) of this important subject for an Adjournment debate.

I suggest that the central problem is the direct conflict of interest between the limited financial and commercial requirements of the Post Office and the wider but equally important national requirements of exports. Where that choice is posed, the paramount consideration is the need to maintain and to expand our existing export trade in books and periodicals.

I join the hon. Gentleman in welcoming the presence of the Under-Secretary of State for Trade.

I stress the importance of this part of our overall export trade, which was worth £175 millions in 1974 and which is likely to reach about £200 millions in the current year. We should not ignore the intangible benefits arising from this trade, which is a prime means of advertising British goods and technology in exported periodicals and books. It is also a crucial vehicle for the dissemination of British culture. Whatever intangible benefit that may be, we hope that it is beneficial both to this country and worldwide.

It is an export trade in which we cannot regard ourselves as having a permanent and captive market. It is intensively competitive, and it is a market in which we shall have to compete very hard on price if we are to maintain our existing share of it. The damaging effect of these charges on British exports is vastly greater in its significance than the limited financial value of the increased charges to the Post Office itself.

I hope that the Minister will give serious consideration to the important suggestion made by the hon. Gentleman that means may be found whereby the Department of Trade can assume some responsibility for the imbalance charges which have fallen on the Post Office so as to permit a substantial reduction in the 54 per cent. increase in the overseas surface rates.

12.11 a.m.

I listened with considerable interest to the speech of my hon. Friend the Member for Lewisham, West (Mr. Price) and also to that of the hon. Member for Tonbridge and Malling (Mr. Stanley), whom I am pleased to see occupying the Opposition Front Bench for this debate. I may see him there on many future occasions when we discuss postal matters. I hope that he enjoys a long stay shadowing me.

I am grateful to both the hon. Gentlemen and my hon. Friend for their constructive contributions to this very important debate on overseas postal price increases. I am also indebted to my hon. Friend the Under-Secretary of State for Trade, who has been sitting next to me listening to both speeches with great interest. I am sure that he has been as impressed as I have by the arguments which have been advanced.

In the short time available to me, I shall try to deal with some of the matters which have been raised.

The first point which I should like to make clear is that although the Government are naturally consulted on pricing policy, postage rates for specific services are essentially a matter for the Post Office and its users' council. This fact is enshrined in the 1969 Post Office Act, which my hon. Friend and I supported vigorously in 1968, and which imposed on the Post Office a duty to provide postal services whilst having regard to "efficiency and economy" and gave the Post Office the power to make schemes setting out the charges and conditions applicable to its services. In recent years this freedom has of course been restricted by the requirements of counter-inflationary policy and the terms of successive price codes, with the result that this year the Post Office as a whole faces losses of about £300 million, which is likely to rise to an estimated £700 million in 1975–76.

Facing these massive forecast deficits, the Post Office had no choice but to seek substantial price increases. Even so, at the urging of my right hon. Friend the Secretary of State it has sought lower increases than the maxima which could have been claimed under the stage 4 Price Code and will accordingly still be left with an estimated loss of about £50 million next year. All these proposals have been referred, as required by statute, to the Post Office Users' National Council, and all except the overseas rates have also to be approved by the Price Commission. Neither of these bodies has yet reported on its consideration of the Post Office proposals, so that no final decisions have yet been made. But I shall not conceal from the House the Government's belief that there is a compelling case for their acceptance and introduction.

My hon. Friend the Member for Lewisham, West takes issue with the Government on the whole question of the price rises in nationalised industries, as set out in the two speeches of the Chancellor of the Exchequer, but my right hon. Friend acknowledged that he knew it would be a painful and disagreeable business to carry this policy through, even by stages. However, we believe that a return to economic pricing is as essential to the efficiency of the public sector as it is to the private sector and to the effective control of public expenditure.

As the Minister responsible, I get rather tired of one day being told that nationalised industries are inefficient and do not make a profit, and then, when they seek to operate in a commercial way, and at least wash their faces, as we say in my part of the country, hearing criticism of them.

I have dealt with the background, my rôle, and the Government's attitude. In the overseas postal services, with which we are particularly concerned tonight, the Post Office forecasts a deficit in the current year of £4½5 million, assuming no price changes. Because of rising sea conveyance costs and the steep increases in imbalance payments decided at the 1974 Congress of the Universal Postal Union, the Post Office expects this deficit to amount to £24½5 million next year. That decision of the UPU, which increased and extended the compensation arrangements first introduced by the 1969 Tokyo Congress, was strongly resisted by the British delegation, but its views were overborne by the majority and the Post Office must consequently abide by the terms of the new convention.

That is why the Post Office originally proposed, for introduction in March this year, very substantial increases in the overseas printed paper services, which operate at a heavy and increasing loss. The House will know, however, that, following the detailed and persuasive representations made by the publishers, booksellers and hon. Members, including my learned Friend and the hon. Member for Tonbridge and Malling (Mr. Stanley) to the users' council, the Post Office has recently modified its proposals to meet their wishes. As a result, I understand that for the rest of 1975 the proposed increases would be cut by half: in weighted average terms the overseas printed paper full rate would rise by 24 per cent. instead of 66 per cent; the printed paper reduced rate would go up by 54 per cent. instead of 100 per cent., and the rate for direct agents' bags by 50 per cent. instead of 100 per cent. It is, of course, true that the original increases are still proposed for introduction in January next year, but I am sure that hon. Members will readily acknowledge the value of the concession which the Post Office has proposed in putting forward these revised measures, which will cost it about £3 million in revenue forgone and still leave the reduced rate service to operate at a loss even after the second stage increase in January next year.

My hon. Friend indicated that these measures have been taken to meet some people's wishes. I put it on record that I have found no publishers in this field whose wishes are met by this reduction and I feel that this will still represent crippling increases.

That is as may be, but my hon. Friend must recognise that it is a concession made by the Post Office. Having read the magazines concerned, I thought there was at least a qualified enthusiasm for the new proposals which the Post Office have made.

My hon. Friend suggested that one way out of the problems with which we are faced should be some form of subsidy. Having already explained the Government's decision to phase out subsidies to nationalised industries, I am afraid that it would simply not be realistic to accept my hon. Friend's suggestion. I cannot believe that it would be right to put the Government's decision into effect with one hand and to circumvent it by seeking to introduce subsidies with the other.

The hard fact is that any such subsidy has to be paid for. It could only be introduced at the expense of other users of the postal services or of the taxpayer, and I must make it clear that the Government see no justification for either course.

I give my hon. Friend a firm assurance on one matter which I know has been troubling some members of the publishing industry. The Post Office has no plans to abolish the special rates which have long applied to books, periodicals and newspapers sent overseas by post.

My hon. Friend said he was concerned about the effect on jobs, exports, and so on. I fully understand the concern which has been expressed on behalf of the publishing industry about rising costs, the effect of postal increases on jobs in the industry, and the possible effect on exports. I know that publishers make and want to maintain a most valuable contribution to exports. The export performance of any industry is influenced by many different factors, and it is not easy to single out any particular change and pinpoint its effect. I hope that the effects will not be as serious as the industry fears, and I am sure that publishers will assess how best to mitigate them and maintain their export trade, even to the extent of considering alternative means of distribution.

My hon. Friend also raised the question of comparisons with other countries. I cannot speak for my counterparts in other countries. I am not responsible for the tariff policies pursued in the United States postal service, or in other administrations, though I expect that all member countries of the UPU will in due course be reviewing their postage rates to take account of the decisions of the 1974 congress, and that those who find themselves in a similar position to the British Post Office will be led to seek a similar remedy.

I have tried to cover some of the points that have been raised tonight. I appreciate the concern that has been expressed by both hon. Members, and I hope that what I have said has helped to clarify the situation. I hope, too, that the new proposals put forward by the Post Office will be regarded as a reasonable concession, bearing in mind the considerable deficit that it has to bear.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Twelve o'clock.