When the House debated transport policy last month I was able to report on the progress which the Chairman of the Railways Board and I had made on the determination of the new basic railway network. I am now glad to be able to tell the House that the network has been decided. A detailed map of the network, with an explanatory foreword by the Chairman and myself, will be available in the Vote Office at 11 o'clock.

In deciding which lines should be included I have taken account of my consultations with the planning Ministers, with the Economic Planning Councils, and with the railway unions. Above all, I have given full weight to the Government's determination that broader social and economic needs, not just narrow profitability, should count when it comes to national decisions on priorities. The result is a basic network of about 11,000 miles—some 3,000 miles longer than the likely outcome of the policy of the last Administration.

This will be a network of which the industry, and the country, can be proud. In itself, it will give a much-needed boost to railway efficiency and morale, but the Chairman and I do not intend that these 11,000 miles should simply remain in being; they must be a working system, continually developed with the aid of modern research and technology: and I shall see that this is done.

The Railways Board will now be reviewing the future of the lines outside the basic network. For these lines, it will be up to the Board to publish passenger closure proposals under Section 56 of the Transport Act if it so decides. But I would remind the House that no such line will be closed without my individual consent, and only after a full examination by the Transport Users Consultative Committees and the Economic Planning Councils of the hardship and economic planning implications.

The basic network is a landmark in carrying out the railway policy set out in the Government's White Paper. It will help the railways to provide an efficient and flexible service to the public, fitted to the needs of the day. The Government are determined that a revitalised railway industry should play its full part in the integrated transport system of the country. This network will give them the right infrastructure to do it.

Is the right hon. Lady aware that it has been a growing practice, since morning Sittings began, to make Statements which are palatable to Government supporters in the afternoon and those which are unpalatable to them in the morning? Is she further aware that it is a monstrous discourtesy to the House to make a Statement at 10 o'clock, when the map which we are discussing, if we are to have any substance out of this Statement, will not be published for another 50 minutes, and that this is something which all my hon. Friends will wish to probe most deeply in relation to what is happening in their regions?

How does the right hon. Lady propose to maintain lines which are running at a loss? To what extent will the local authority contribute and to what extent will the central Government? What sanctions does she propose to use if a local authority does not contribute, and how will she undertake to keep these lines going if they are running at a loss? Is she further aware that, for every seven miles closed in the period 1951–64, she is closing 10 miles under her present proposals?

I cannot accept for one moment that this statement is unpalatable to Government supporters. On the contrary, they realise full well the plans which were afoot under the policy of the previous Administration for a constant contraction of our railway service to a mere skeleton of a system—

rose—

Hon. Gentlemen must not jump up at this stage. The hon. Member for Weston-super-Mare (Mr. Webster) has asked me half a dozen questions and I must take some time to answer them. Of course, when the railway map is available for detailed consideration, it will be open to any hon. Member to put down any Questions or to probe in any way he likes, and I shall be only too delighted to try to deal with any particular points.

The hon. Member for Weston-super-Mare asked how unprofitable lines will be paid for. We have discussed this matter in the House; it was referred to in the White Paper and it was discussed in the debate on transport policy. There is at the moment a joint study going on between the Railways Board and myself, under a steering committee, of which the Joint Parliamentary Secretary is Chairman, and the job of which is to identify these socially necessary unprofitable lines and decide the amount of subsidy that will be necessary. We have made it clear that the Government, having adopted a policy of maintaining socially necessary lines—even if they do not pay—must, the Government having made that decision, give an open subsidy for those lines; and I am sure that the majority of hon. Members welcome this decision.

The position regarding local authorities has already been outlined in the White Paper. We will be moving forward towards the creation of conurbation transport authorities and—

On a point of order. Is it not a fact that, in accordance with the custom and tradition of this House, you ask for supplementaries to be brief, Mr. Speaker? That being so, should you—

Sit down.

I was asking, Mr. Speaker—[Interruption.]

Order. There is too much morning enthusiasm.

Are we to have inflicted upon us by Ministers long answers of this type? Cannot Ministers be brief, as back benchers are asked to be brief?

Order. I allow a certain amount of latitude or longitude to the Front Bench spokesmen.

There is too much longitude.

As I have had a number of questions inflicted on me by the hon. Member for Weston-super-Mare—[Interruption.]—presumably he wants them answered. It is intolerable if, when I am attempting to answer them, hon. Gentlemen opposite complain.

I was explaining, regarding local authorities, that the new transportation authorities, under the new arrangements for the general help which the Government are giving to public transport, will take over responsibility for deciding which socially necessary lines they want as part of their local transport plans. In such a situation, the responsibility for maintaining those lines could gradually transfer to the local authorities. In the meantime, the subsidy will be a Government subsidy, although we leave it open to individual local authorities to approach the Railways Board and try to negotiate the retention of a purely local line on the basis that they will meet the particular subsidy.

Is my right hon. Friend aware that there will be no discourtesies or competition for discourtesy from this side of the House arising from her statement? Is she aware that we welcome it and that we are, by it, redeeming some of the pledges which we made at the General Election? Is she aware that one of the important results of her statement will be the heartening effect it will have on railway workers throughout the country? I assure my right hon. Friend that she will have the full backing of the influential railway trade unions in this matter.

Order. Even compliments must be phrased in an interrogatory form.

I am grateful to my hon. Friend for those remarks.

The Minister has made an important and interesting statement. Would not she agree—and, as a constituent of mine, I am sure that she will agree—that it is difficult to be sure exactly what she is stating without our having the advantage of having looked at the map first? I cannot believe that it is possible for any hon. Member to say unreservedly that he welcomes her statement without having seen the effect of it by having looked at the map. Would it not have been more convenient to the House—I say nothing about discourtesy because I am sure that the right hon. Lady would not treat the House in a discourteous manner—if the map had been published earlier, instead of at 11 o'clock, and her statement made this afternoon, since we would then have been able to examine the matter more closely, and—

Order. Questions must be brief.

Would not the right hon. Lady agree that we would have been able to examine the matter more closely and been able to ask questions more intelligently than we are able to do without the map?

It is possible to welcome unreservedly the two principles which I have laid down. The first is that the Government do not believe that we can have a satisfactory railway network in Britain on the basis of purely commercial considerations. This is, therefore, a fundamental change of policy and, on that principle, hon. Members can make up their minds. The second point to be welcomed is the fact that we are going to give a period of stabilisation to the railway industry on the basis of a railway network which is about 3,000 miles longer than it would otherwise have been.

To answer the hon. Gentleman's question about the availability of the map, even if it had been released earlier, this is inevitably such a detailed subject that at this stage it is possible to discuss only the broad principles. However, it will be open to hon. Members to put down Questions about details of the matter in the normal way.

Is my right hon. Friend aware that the Central Wales line was examined by the T.U.C.C. about five years ago? Is it her intention that this line should again be examined by herself and the T.U.C.C.?

Yes, Sir, that is so. The Central Wales line will be one of the lines on the map for further consideration. However, I repeat that those lines on the man which are not included in the basic network will not necessarily all be closed. They are simply lines which need further examination so that we can see whether they should be retained, whether they should be modified or whether alternative methods can be found to cater for the people of the area.

Would not the right hon. Lady agree that it is rather odd for her to have made a statement like this without hon. Members having the map, particularly since the map will be available in only half on hour's time? I do not wish to accuse the right hon. Lady of discourtesy, but I urge her not to follow the example of some other members of the present Administration, and to show at least some courtesy to the House of Commons.

Accepting all she says about socially necessary things, is she aware that one socially necessary thing always competes against another socially necessary thing for the limited resources that are available? Will she, therefore, when making her judgments about what is necessary, at least bear in mind and examine carefully those instances where local authorities press for the preservation of a line—[HON. MEMBERS: "Too long."]—I apologise to the Minister for the barking that is coming from her hon. Friends; it is making my question that much longer—at the same time as they maintain an uneconomic bus service in competition with it?

I naturally do not want to be discourteous to the House, and did not think that I was being discourteous. It is quite normal practice for a Minister to make a statement and to draw attention to material that is being placed in the Vote Office. I repeat that this is inevitably a detailed matter which could not possibly, even if the map were available now, be examined in great detail in the form of question and answer following a statement.

As to what is socially necessary, we of course recognise that there must be a balance here—a balance on the basis of social cost benefit. This is the principle that we are bringing into our consideration of these lines. One factor which we shall take into account—it is important that we should, because this country cannot afford to throw money about just for the fun of it—in examining the grey lines on the map is to consider what are the alternatives and whether a more integrated local policy might be able to make the line pay.

Will my right hon. Friend bear in mind the broader social and economic considerations in central and south Scotland? Is she in a position to say anything about the Edinburgh—Carlisle line?

As my hon. Friend is no doubt aware, the Edinburgh—Carlisle line has already been proposed for closure and is already coming under the normal examination. [HON. MEMBERS: "Oh!"] This preceded the publication of the map, and whether in the end the Edinburgh—Carlisle line finishes up as one of the parts of the stabilised network must depend on the outcome of this examination.

While there is no reference to Scotland in the Minister's statement, we welcome the fact that it says that social and economic needs will be considered in coming to decisions on closures, and so forth. Is she aware that this affects my part of the country, the Highlands of Scotland, very much? I should like an assurance from the right hon. Lady that there will be no further rundown in railway services in the Highlands of Scotland, because we are at the moment suffering a great deal on account of the rundown that has taken place in the past.

I am sure that the hon. Gentleman will be delighted to know that as a result of my reversal of the previous Administration's policy, the line routes included in the basic network map include the Perth-Thurso line, which would have disappeared, the Aberdeen-Inverness line, which would have disappeared, the Helensburgh-Oban line, which would have disappeared, and a number of others.

Mr. Mendelson.

rose—[Interruption.]

Order.

On a point of order, Mr. Speaker. I ask, with the greatest respect to you, why, if hon. Members on this side seem to be pulled up right away, hon. and right hon. Members opposite get the utmost liberty to throw remarks about in this Chamber.

I call to order hon. Members who are misbehaving when I notice them. I happened to notice the hon. Member concerned. Mr. Mendelson.

I should like to ask about the decisions which my right hon. Friend reserves to herself after these matters have been before the Economic Development Council. Would she bear in mind that a conflict is developing between the actual need to save on certain local lines and the future economic development of the areas they serve? The general policy of the Cabinet to have diversity of industry and new industries in certain old industrial areas is now being contradicted by the decision to close or drastically revise certain lines that should be kept open on economic grounds.

I am very acutely aware of the need to take into consideration possible industrial and housing development in an area. This is one of the facts which should be very much taken care of by the Economic Planning Councils, and the basic map has been drawn up in consultation with them. The responsibility for the final network is mine, but the councils with this kind of idea in mind, have put many proposals to me to which I have responded in drawing up the basic network. I repeat that when we examine the closures which will have to be considered in the next few months, I shall have this very much in mind as well.

As the present Government have either closed or plan the closure of 4,991 miles of railway line compared with 3,480 miles in the 13 years when the previous Government were in power, does not the right hon. Lady agree that it is outrageous that we should have this statement made without the map? Why could the map not have been given to us by 10 a.m., in time for her statement?

Will the right hon. Lady also—

Order. Supplementary questions must be brief.

—try to explain what is meant by gradually transferring the burden to local authorities? Does this mean that the 11,000 miles target can be achieved only if ratepayers in certain areas accept a further heavy burden? If so, is this wise in view of the already heavy burden that exists?

I hope that we can nail once and for all the mythology that hon. Members opposite had tried to build up about closures. The truth is that more mileage was planned for closure in the last year of Conservative government than there has been in the whole life of this Government. The right hon. Member for Wallasey (Mr. Marples) merely refused 10 closures during his period of office; my right hon. Friend the Member for Hamilton (Mr. Tom Fraser) and I refused 29 in our two years of responsibility. Hon. Members will be able to see perfectly clearly what we have done in fixing this basic network to reverse a situation under which, under the logic of the policy of the previous Administration, we should have had something like 4,800 passenger miles left on our railway network. That was a fact, and this is the policy we have reversed.

As to local councils, the answer to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) is that it does not mean that the preservation of 11,000 route miles depends on the ratepayers' carrying this burden.

May I congratulate my right hon. Friend on allaying the doubts and anxieties that have hung over the railway industry since the days when the present Opposition were in power? Can she assure the House that the basic railway network as it is to be published will remain for the foreseeable future? Will she agree that if local authorities are to play a part in financing the maintenance of unprofitable branch lines, it may mean some changes in the criteria by which the central Government support local government? Will she consider consulting her right hon. Friend the Minister of Housing and Local Government with this end in view?

I am grateful to my hon. Friend. As a result of this reversal of policy, new hope is being brought to the South-West, because included in the basic network will be the Plymouth-Penzance line, the Salisbury-Exeter and Okehampton-Barnstaple line, and the Castle Cary-Dorchester line. These are some of the examples of what will be in the basic network map. I can assure my hon. Friend that no proposals for the closure of any lines now in the basic network will be made in the foreseeable future.

On the local authority point, quite clearly it would be ridiculous to transfer to existing local authorities the Exchequer burden that we are openly taking here. There must be a move towards the creation of wider transport authorities in the context of the grant policy for public transport as a whole before a transfer of the burden could even be contemplated. In addition, I repeat that some local authorities have said that there are purely local lines that might otherwise be closed under Section 56 but which they want a chance to try to keep open by local subsidy. I have made it clear that if they want to do that, it will be open to them to negotiate with the British Railways Board.

rose—

Order. We must cut down the length of supplementary questions and answers if possible. Sir John Eden.

Before leaving this matter, Mr. Speaker, may we hear from the right hon. Lady at what time the map was given to the Press?

Having regard to the open-ended subsidy to which the Minister referred, whatever that jargon may mean, has she calculated what this will add to the existing rate of loss on the railways of £130 million per annum, when she abandons a commercial enterprise in favour of a Ministry of Social Security exercise?

Hon. Members opposite had better make up their minds whether their objection is that I am to subsidise too much or whether it is that no lines are to be closed at all. This has been the duplicity of the policy of hon. Members opposite for years—[Interruption.]—and it has bedevilled the case—

On a point of order, Mr. Speaker. Is it in order for the Minister to accuse hon. Members on this side of duplicity?

I think that the right hon. Gentleman is being unduly sensitive.

It is—

Withdraw.

Order. We should be able to proceed more quietly.

It is this which has be-devilled the creation of a proper railways policy. I do not know what the hon. Member for Worcestershire, South (Sir G. Nabarro) means by his reference to "open-ended subsidy". I have made it clear that, on the contrary, in every case where the Government decide that a line is socially necessary, the joint survey to which I have referred will examine in great detail what economies can be brought into play in order to reduce the loss before deciding the size of the contribution which has to be made on social grounds by the Government.

This will not add to the deficit of the Board, because the position at the moment is that, where closures are refused, the cost falls on the deficit anyhow. The right hon. Member for Wallasey refused certain closures on the one hand, while, on the other, lecturing the Railways Board about the need to pay its way. No one could hope in that way to get an efficiency target for British Railways that it could hope to reach.

On a point order, Mr. Speaker. May we take it that my right hon. and hon. Friends will be allowed to ask longer supplementary questions in view of the disproportionate amount of time being taken by the right hon. Lady's answers?

I have already commented on that matter.

The trouble is that I get such long questions, so I have to give long answers.

On a point of order, Mr. Speaker. That jibe was directed at me. Is it not a fact that my supplementary question was a masterpiece of brevity?

Well, it certainly was not a masterpiece of sanity.

You have constantly ruled, Mr. Speaker, that supplementary questions should be brief. If my supple- mentary question had not been brief, you would have been on your feet in a split second. But you made no attempt to halt my question, which was a masterpiece of brevity. Would you, therefore, ask the right hon. Lady to withdraw her shocking innuendo that my supplementary was insane and not brief?

The last question is not part of the hon. Gentleman's point of order, the first part of which was a statement of fact.

You agree with it?

Order. The hon. Gentleman must contain himself a little. We must get on.

Has the right hon. Lady made any assessment of the likely increase to the taxpayer of the Government's policy?

Perhaps I should explain what happens if a closure is refused even though the line is losing money. This cost falls on the deficit, although it is the Government and Parliament who have decided that the line should remain open. In such a situation, it is obvious common sense to have a separate social account so that, Parliament having willed a line to be kept open, Parliament will put it not on the deficit but under a special social subsidy. The amount involved cannot be foreseen until the joint survey has examined each socially necessary line, what economies can be made and what size of subsidy will be required.

rose—

Order. We cannot debate this now. Mr. Marsh—statement.

On a point of order, Mr. Speaker. I wish to seek your guidance on an important point. According to the Order Paper for this morning, the Minister of Power is now to make a statement, and the subject is described as being "National Steel Corporation salaries". My question is not concerned with the content of the statement, which we have not yet heard, but with the subject and timing.

This is undeniably a matter of great importance. First, it is now more than four months since we asked for a statement on the subject. Secondly, the right hon. Gentleman has told us that this matter raises the whole question of the incomes policy and of the salary structure of the other nationalised industries. Thirdly, it is on record and is not a surmise that there are wide divergencies of opinion in the party opposite as to what is necessary and what the answer to the problem should be.

The Leader of the House said on 14th December:

"Let me emphasise that important or controversial statements … will still be taken at 3.30 p.m."—[OFFICIAL REPORT, 14th December, 1966; Vol. 738, c. 490.]

Is it not an outrageous abuse of the whole idea of morning Sittings that a controversial matter of this importance should be deliberately slipped in at a time when the Government knew that the majority of Labour Members would be absent at another meeting in this building?

rose—

On a point of order.

Mr. Biffen—point of order?

It is the same point of order, Mr. Speaker.

If it is the same point of order, then surely there is no need to make it again.

Further to that point of order, Mr. Speaker. May I also bring to your attention the fact that the right hon. Lady the Minister of Transport said that her statement involved a fundamental change of policy? I submit that this clearly indicates that her statement was conceived to be one of major significance and falls without the terms set by the Leader of the House.

It would be quite impossible for Mr. Speaker if he tried to decide which of the matters brought before the House in the morning fell within the terms of the statement made by the Leader of the House in the debate on morning Sittings. This must be a matter for the judgment of the Leader of the House and—

Where is he?

Order. The hon. Member for Worcestershire, South (Sir G. Nabarro) must cease interrupting.

This must be a matter for the judgment of the Leader of the House and the House and the criticisms directed must be political criticisms and not questions of order through the Chair.

Further to that point of order, Mr. Speaker. What disturbs me is that, through what seems to me to be the customary duplicity of the Government, the Chair is constantly being made the target of attack quite unnecessarily and wrongly.

Order. I have never been aware that the Chair has been made the subject of attack.

I am sorry, Mr. Speaker, but surely the Chair comes between the Government and the Opposition to a very wrong and undesirable extent. I put it to you—

Order. It was just for that reason that I ruled that this was not a point for me.

On a point of order, Mr. Speaker. Your Ruling that back benchers have no recourse to the Chair to insist on the keeping of the promise given to the House by the Leader of the House on 14th December places us in a very difficult position. Do we have no protection so as to prevent the Minister of Power from going back on the promise given by the Leader of the House? These were supposed to be non-controversial statements of secondary importance?

Again the hon. Gentleman is trying to bring the Chair into this. The back bencher is not without protection. He has hundreds of Parliamentary remedies. I have known them to be used. What the Chair refuses to do is to take any part in the dispute between the two sides of the House.

Further to that point of order, Mr. Speaker. I can understand the difficult position in which you, as Mr. Speaker, are placed. Nevertheless, I am sure you appreciate the problems which face back benchers on both sides. As I understood it, when we agreed to morning Sittings, it was that statements made in the morning would be, on the whole, of an uncontroversial nature and that any statements likely to be controversial and that any announcements of policy—

Order. This is exactly the same point on which I have already ruled.

May I ask, Mr. Speaker, a question on the Ruling you have made that it is not open to the Chair to interpret what is an important statement? What protection in those circumstances do back benchers have? With respect, surely the Chair has always taken upon itself this duty? For example, if the adjournment of the House is moved, it interprets what is a definite matter of urgency. Surely, it must be for the Chair to interpret whether undertakings given to the House by the Leader of the House are being carried out or not.

That is most ingeniously put, but on that issue of Standing Order No. 9 I have the instructions of the House and my predecessors had instructions. I have not been instructed by the House to decide the kind of questions which, in my judgment, should be brought by the Leader of the House before the House on morning sittings. It would indeed be untenable if Mr. Speaker were placed in that position.

Mr. Speaker, would it not help the House if I were allowed to make the statement, and hon. Members would then be in a better position to judge whether it is controversial?

Perhaps I can help. I appreciate that the House wants to get on with its business. Now that the Patronage Secretary has arrived, and as it is clear, whatever the Minister says, that the statement will be controversial and is certainly of great importance, I wonder whether we could bring this matter to a satisfactory conclusion if the Minister would consult the Patronage Secretary and make his statement at a time when we would have a fuller House? I repeat that it is four months since we asked the Minister to make a statement, and, therefore, half a day or a day is neither here nor there. We should like this statement to be made in front of a full House. If this could be done, we could then get on with our business.

Points of order are very interesting, but they tend to waste the time of the House. We have quite a lot of business this morning.

On a point of order, Mr. Speaker. Would you enlighten me as to whether the term "duplicity" implied by the hon. Member for Peyton on members of the Government is or is not a Parliamentary expression?

The hon. Gentleman was not here when exactly the same term was used some time ago by a Minister. I ruled on it then.

rose—

Order. I want to get on with the business of the House.

Further to that point of order. As the hon. Member for Poplar (Mr. Mikardo) specifically referred to myself, I think, though he mentioned my name and not my constituency—

Order. I ruled some time ago on the question of the use of the word "duplicity".

Since it is important that we should try to get the new morning sittings procedure correct, may I make this submission? What you are saying, Sir, is that you have no control whatsoever over the content or nature of statements that the Government choose to make. In these circumstances, are we not right completely to distrust the word of the Leader of the House?

Whether hon. Members trust or distrust the word of the Leader of the House is not for the Chair. I believe that such a phenomenon has happened in history.

Mr. Speaker, the Minister of Transport described the statement which she made as of fundamental importance. That will be within the recollection of the Chair. Is there no way in which back benchers—

A point of order becomes no more a point of order by being repeated again and again.

Further to the original point of order which we are supposed to be on, Mr. Speaker. In the course of every one of your answers you have referred to the Leader of the House and disclaimed any responsibility of the Chair to adjudicate as to what is a matter of importance or otherwise. In these cirsumstances, is it not the greatest discourtesy to the entire House that the Leader of the House is always missing on these occasions? Cannot you send for the Leader of the House, Sir?

The last question is rhetorical. The hon. Gentleman knows that that is not a matter for me.

rose—

On a point of order, Mr. Speaker.

Order. I refuse to hear the hon. Gentleman on a second point of order.

Further to this point of order. It is quite clear that the House feels strongly about this matter and it is the first occasion on which important and controversial statements have been made at a morning sitting. It would be normal, if this were not a morning sitting, to involve you, Sir, by moving the Adjournment of the House under Standing Order No. 9. Then you, Mr. Speaker, would be involved to the extent that you would have to decide whether this was a definite matter of urgent public importance. Since this is a morning sitting, I believe I am right in saying that it is not possible to move the Adjournment of the House under Standing Order No. 9. Therefore, the only remedy left to hon. Members in this highly important matter is to move that the House do now adjourn. Accordingly, I beg to move, That this House do now adjourn.

I am not prepared to accept that Motion. Mr. Marsh, Statement.

With your permission, Mr. Speaker, I should like to make a statement.

The new National Steel Corporation will be the biggest manufacturing complex in the U.K. and one of the biggest in the world. The success of steel nationalisation is essential therefore to the nation's economic well-being. This in turn depends on the extent to which the Corporation can keep and strengthen managerial talent throughout the industry. In a mixed economy the public sector of the steel industry must be able to develop and hold a fair proportion of the best managerial talent and, although it would not be appropriate for it to try to match the highest levels of salaries paid in the private sector, the ceiling provided by the Board salaries must be at a level which will not depress the salary structure lower down in the industry.

In the light of these considerations, the Government have decided that the annual salary range normally applicable to members of the National Steel Corporation should be:

Deputy Chairmen	£20–24,000
Full-time Members	£15–19.000
Part-time Members	£1,000

The salary range proposed for deputy chairmen and full-time members of the Corporation is broadly in line with the salaries now earned by the chairmen and managing directors, respectively, of the major steel companies, which are much smaller organisations than the Corporation. They are below the higher levels of salary in other fields of industry. Nevertheless, in view of the Government's incomes policy, these salary ranges will be cut by 12½ per cent. for a period of two years from the date of establishment of the Corporation.

Is the right hon. Gentleman aware that, contrary to the undertaking given by the Leader of the House, he has made what undoubtedly is a very important statement, bearing, as it does, not only upon the National Steel Corporation, but upon incomes policy and upon those who sit on the boards of other nationalised industries?

I would like to put to the Minister a number of questions briefly. First, will he tell us something about the salary of the Chairman? Secondly, were these the salary levels which were recommended to him by the Organising Committee, which was specifically set up, among other things, to advise him on this point? If these were not the Organising Committee's recommendations, what were the recommendations of that Committee?

Thirdly, while congratulating the right hon. Gentleman on over-riding the majority of his supporters and agreeing to Beeching-scale salaries, may I ask him what effect this decision will have on the salary structure of other nationalised industries, which was one of the factors mentioned by the right hon. Gentleman himself specifically at Question Time on 21st February? In other words, does he agree that they will now have to be jacked up?

Finally, if a new company were setting up in the private sector, presumably the remuneration of those in charge of the company would not be limited for a period of two years. If that is so, why is the right hon. Gentleman insisting on this special limitation on the National Steel Corporation, which the right hon. Gentleman has repeatedly said, time and time again, should be run on strictly commercial lines like any other enterprise in the private sector?

Lord Melchett, at his own request, will serve as Chairman for the next two years on his present personal salary of £16,000 a year, which is the salary he is now paid as Chairman of the Organising Committee, but substantially less than that which he earned before his present appointment. I would link that, if I may, with the last point which the right hon. Gentleman asked, on the limitation of these salaries, their abatement, because of the incomes policy.

The purpose of this exercise is to ensure that there is, within the industry, a ceiling at a sufficient level to enable salaries underneath to be equated with their opposite numbers in private industry. Therefore, although I think that it is important to get this ceiling, the important factor about the ceiling is the substantive figure rather than the actual take-home figure. This is one of the reasons why Lord Melchett took the line that he did not particularly want his own salary changed. The right hon. Gentleman also raised the question of the Organising Committee's recommendations to me. These are, of course, confidential. The position of the other nationalised industries was raised. These are not in question at the moment, although steel is in a special position here—

Oh.

Oh, yes, even if my hon. Friend does not recognise this. Steel is in a special position for two reasons, that it is not a monopoly industry—people can go elsewhere—and that it is a manufacturing industry. That is why these scales have to bear some relationship to those paid in manufacturing industry. However, in terms of the incomes policy, these are not increases; they are not in excess of such salaries already being received.

Since, with the setting up of the National Steel Corporation, there will be a substantial reduction in the number of directors in the steel industry, what kind of saving does my right hon. Friend envisage as a result of this new structure, with salaries at the present level? Will there be any existing contract of employment which will continue, under the guarantee which the Government have given, by which any new member will be getting more than the salaries which my right hon. Friend has announced?

Yes. As in the case of all nationalisation Measures, there is, of course, personal protection for those people at present in the industry and some of those salaries are, in fact, in excess of some of these that I have announced. My hon. Friend also talked about the number of directors, which is an important point to bear in mind. Under the new Corporation, the number of full-time functional directors will be about six, compared with a total at present in the industry of about 200.

While welcoming the nature of the right hon. Gentleman's statement as a move in the right direction, may I assure him that all those with the interests of the industry at heart will accept this as a bold gesture in the right direction? What consideration will he give to other emoluments, such as pensions, expenses and other factors?

The question of expenses, as with all nationalised industries, is merely the repayment of expenses necessarily incurred in the course of the job. The pension schemes will be the same as in the nationalised industries.

Is my right hon. Friend aware that anyone who has any experience, as I have had, of setting up a steel corporation and fixing the salaries, must be convinced that it is essential, if we are to have a successful nationalised steel industry, to get the very best and outstanding men in industry on the board and to pay whatever salaries are necessary, that the alternative of getting retired people from the Armed Services or the Civil Service, excellent though they may be, is not good enough, and that he has done exactly the right thing to make the Corporation a great success, of which he and the country can be proud?

I am grateful to my right hon. Friend. Not surprisingly, I agree with his comments. It has to be remembered that this will be a functional board. Its members will have specific line responsibilities. As such, these jobs must be filled with the best people we can get, and it is my intention—I am sure that it would be the intention of all my hon. Friends who believe in public ownership—that the National Steel Corporation must be in the market for any talent that it wants, at the prices which attract it.

Does the right hon. Gentleman regard this statement as being, in the words of the Leader of the House, as "of secondary importance"? Does he now recall with regret, in view of his powerful arguments for the salaries, the criticisms which his right hon. Friends made some years ago of the salary arrangements made for Lord Beeching? Does he think that, in the light of these arguments, he can hold the salaries of the other nationalised industries at their present relatively low level? Fourth, is he not aware that most people outside will regard the technique of fixing a large salary and then temporarily knocking 12½ per cent. off it as so much eye-wash?

I do not know whether the right hon. Gentleman would regard a 12½ per cent. cut in his salary as eye-wash—

Not if it were one that I was not receiving in the job.

No, the right hon. Gentleman does not understand the position. These people are getting these levels of salaries now. These are not people from nationalised industries—that is the point. The important thing about abating the salaries is to fix the substantive scale, which provides the ceiling within which the management and middle management is contained. On the right hon. Gentleman's other point, I should not have thought that this question was controversial. It seems to me that any statement, the logic of which is so crystal clear, would be clearly acceptable on both sides.

Does my right hon. Friend expect an enthusiastic welcome for his statement from the pottery workers, whom we will this evening legislate to prevent from getting a few shillings a week increase?

I should like to deal with this point in general rather than in the particular. The whole question of the incomes policy is very important and controversial—

You have made nonsense of it.

My hon. Friend may think so. I should be grateful to deal with this point, because the incomes policy is important. These are not increases in salaries. This is a new scale for a new job for people who have not been employed in that job before. Second, these are not increases, in some cases, to the people who are taking the jobs, because they are already receiving salaries at this level. Third, these are by no means high salaries compared with existing salaries in the rest of industry.

Therefore, there can be no argument—this has nothing to do with the incomes policy at all, because it does not involve increases in pay. I put the simple and important proposition to my hon. Friends that the alternative is to try to run this nationalised industry, with all its implications for the economy, with the people whom we can get, who would not be the people we necessarily wanted.

rose—

On a point of order. Is there any way in which one can secure that the Minister answers the question put to him instead of a quite different one? I asked one susceptible to a "Yes" or "No" answer, whether he expected an enthusiastic welcome—

Order. That is a singularly naïve point of order from an experienced Parliamentarian.

May I probe this 12½ per cent. nonsense? Is the right hon. Gentleman aware that he has emphasised the importance of an adequate salary structure and has acknowledged that this is one of the principal reasons why he has fixed the level which he has? He then announced that there would be a two-year moratorium, during which the salaries will be l2½ per cent. below that level. Is this reduction, therefore, to apply to all new appointments of regional directors or managaing directors to the new companies? Does he envisage that, during these two years, these senior officials down the line might receive more than the members of the Corporation? Does he realise that this would be a bit of a nonsense?

These salaries apply purely to the members of the Corporation itself, the Chairman, the Deputy Chairmen, and the functional directors. The rest of the salaries are, of course, fixed by the Corporation. As regards the abatement, those people with whom I have discussed it so far, who are being considered for appointments in the light of the various implications which we face, see no difficulty about this. They recognise the implications and are perfectly happy, in a publicly-spirited way, to accept them.

Is my right hon. Friend aware that whilst we recognise the obvious difficulties in dealing with salary structures in a mixed economy, he has set a grave and dangerous precedent in seeming to replace a rational salary structure in the public sector with an irrational salary structure from the private sector? Is he also aware that his statement is bound to cause widespread resentment amongst board members in all the existing public corporations and senior officials throughout the Government service?

It has never been in doubt that however one dealt with the subject it provided difficulties. It is easy to list all the difficulties, but the problem is finding some of the answers. On the rational structure in the publicly-owned industries—if it is referred to as such—and the irrational structure in the private sector, the fact is that the Corporation, unlike the gas, electricity and coal industries, will not have a monopoly. There will be a private sector of over 200 steel companies, and there is also a large engineering sector. If one sets out to produce the best people there is no alternative to this approach even with all the problems.

Whilst I congratulate the Minister on what the whole House would agree is a courageous approach to the problem, would he expand a little on the effect of his statement on the other nationalised industries? Is it because the steel industry is not a monopoly that he had to pay the market rate for the job? Does that mean that the Government are using a monopoly position in other State enterprises to depress salary standards?

There is no single salary scale in the nationalised industries. There is already more than one salary range. This is just another for a different industry. The nationalised industries are looked at together from time to time, but my statement deals purely with the one industry, not for increasing anybody's salaries but producing a new salary scale for new people for a new job.

Can my right hon. Friend give an assurance that the future efficiency of the industry was the main factor in his mind in arriving at his decision? Can he also give the House au unqualified assurance that, having tested the market to see who was available for these jobs, his decision was based solely on the fact that it is necessary to secure the men who are hest fitted to run the industry in his view?

Yes, certainly. The importance of the future efficiency of the industry to the economy as a whole should not be under-estimated. It is the biggest manufacturing complex in Britain, bar none. It has an investment of £1,400 million and an annual turnover of £1,000 million. It must be efficient, and when one is trying to ensure greater efficiency than was perhaps always the case in the past one looks for the best managers one can get. In my view, it would be lunacy to lose people one wants for an industry like this in an effort to save a small amount of money.

As commercial salaries are to be paid to the executives, does the Minister expect to see the organisation earn commercial profits? When he talks about the difference between the Corporation and the other nationalised industries is he not being a little disingenuous? Do not the airlines and the railways compete with other forms of transportation, and do not gas, electricity and coal compete with other forms of energy? Will he look at this again?

One is bound to look at this as a commercially viable unit, taking profit into account, I agree. The main purpose of nationalising the industry was that many of us felt that it had been badly run in the past. I would expect to see from the Corporation eventually rather better results commercially than there have been recently.

While I recognise my right hon. Friend's dilemma, would he publish in detail, and resist the blandishments of the directors' lobby on the opposite side of the House, the savings that will be made by the reduction in the salaries or in the numbers paid in the new Corporation? Would he also consider referring the grossly exaggerated level of remuneration that now seems to be paid in the private sector either to the D.E.A. for a period of permanent freeze or to my right hon. Friend the Minister of Social Security for the relief of hardship?

The question of referring general salaries to somebody else is not a point for me. It would be almost impossible to publish the savings in terms of personnel, because I do not know how many people the Corporation will finish up with. One would expect big savings in manpower at every level as a result of public ownership. We shall have a board of half a dozen or so functional directors, a deputy-chairman and chair- man, and there will be many fewer national directors than in the past.

Does the Minister not think that it is unwise as well as unfair to seek to distinguish between executives in, say, the gas or electricity industries, which he specifically mentioned, on the grounds that they have nowhere else to go? That seems wrong. Will he consider giving the 12½ per cent. temporary deductions to a suitable canine charity?

I think that we are all getting rather bored with the last point. On the question of people having nowhere else to go, I was seeking to make the point that nationalising a manufacturing industry is a different exercise from nationalising a service industry. Of course one does not differentiate—[Interruption.] That is true; there is a whole range of difference—between the salary structures on that basis. This is not a question of increasing salaries. Hon. Members talked as if there were one nationalised industry scale. That is not true. There is a number, and this is one more for this industry.

If as my right hon. Friend says, this does not make a nonsense of the incomes policy, why is the 12½ per cent. reduction recommended? Did that extraordinary recommendation come from Mr. Aubrey Jones and his merry men, or from where? Why must he pay salaries in line with what is now being earned by private monopoly inside the steel industry, and why can he not employ technocrats at reasonable salaries to run the industry instead of the inflated salaries of the present owners?

My hon. Friend misunderstands the point. These people will be technocrats. They are not people coming in with their heart in the right place a couple of times a week to make the odd comment about the steel industry. They will be specific, functional, qualified directors for a straight functional job. I do not understand where the incomes policy comes into this. There is nothing in the incomes policy about fixing a rate for a new job. The rates to be paid are not higher than the existing salaries of the people concerned, but lower.

I beg to move,

That leave be given to bring in a Bill to require that every worker shall be entitled to receive written notice of impending dismissal; to establish Dismissal Appeals Boards; and for connected purposes.

I have two principal reasons for seeking leave to introduce the Bill. The first is that I consider that arbitrary dismissal is out-of-date and opposed to modern conceptions of good industrial relations. What is more, it can no longer be tolerated by trade unionists in this country.

Secondly, the country is going through a very difficult period economically, and there is a need to boost our export trade. Strikes, however, justified, do not help, and I consider that if a form of dismissals appeals machinery existed a good many strikes could be eliminated. Such machinery would have a threefold beneficial effect. Employees would benefit through a greater sense of security in their employment. Secondly, industrial establishments would benefit through not having their production lines halted from time to time. Thirdly, the country would benefit through an overall improvement in industrial efficiency.

I appreciate that Britain compares favourably with many of its principal competitors in the amount of working days lost through strike action. Nevertheless, if our position relatively speaking can be improved even more, so much the better. It is difficult to get reliable estimates of the number of dismissals which take place, but I am informed that it approaches 1,000 for each working day every year. It is apparent that arbitrary dismissal is no small problem and that a great potential source of injustice exists here.

The Minister of Labour as reported in page 91 of his evidence to the Royal Commission on Trade Unions and Employers' Associations stated that two-fifths of all stoppages and 20 per cent, of days lost through disputes arise out of conflicts about the employment or discharge of workers or other working arrangements rules and discipline.

A number of classic cases can be stated. There was the case of the young lady who was dismissed from her employment for spending too long in the cloakroom. The strike which resulted from that incident had ramifications which spread throughout large sections of the motor industry. There was the case of a lorry driver who reported to his home base that his brakes had failed. He was nevertheless told to bring the lorry back to the depot. This he refused to do, whereupon he was dismissed. Another case I cite is that of a young clerk employed by a steel company in South Wales who was sacked for distributing union literature during working hours.

Dismissals of this kind are often the result of personal conflicts and of hasty decisions by an employer or his representative. Afterwards the employer has to stick to his decision so that he shall not lose face. In many establishments throughout the country where trade unionism is weak the sack is still the main source of discipline. This is largely the case in small establishments, but even in many large and supposedly modern-thinking companies this code still applies for non-manual white collar workers.

Workers know from bitter experience that once a man is out of a factory it is difficult to obtain justice for him. The need for action is immediate. That is why so many walk-outs take place in industry. This is why I am urging the establishment of dismissal appeal boards throughout the country. A worker would be entitled to receive written notice and, except in cases provided for by the Redundancy Payments Act, 1965, he could appeal to the board against dismissal. Until such time as the appeal had been heard, the worker would remain in work or, in serious cases, he would be regarded as under suspension. The board, when considering its decision, would bear in mind the need to foster good industrial relations to ensure fair and quick treatment for all workers and to ensure that those workers have the right to organise themselves into trade unions.

I appreciate that in many establishments good voluntary agreements on dismissal procedure already exist, but are these sufficient? The answer must be "No", for in many establishments there is no trade union. I agree that all workers should be members of trade unions, but often the threat of dismissal is used to prevent the formation of such an organisation. The threat of the sack is still a great disincentive to forming a union or to becoming a shop steward. Nevertheless, in establishments where good voluntary agreements exist by agreement a company could apply to the Board for exemption from these statutory schemes.

According to The Times on Monday this week, it appears that the Minister of Labour is now thinking along the lines I have outlined. This is to be welcomed. Our machinery on dismissals is behind the times. For example, Western Germany is way ahead in this matter. Our system seems to be based on the principle that a man is guilty until he is proved innocent. The Bill which I seek leave to introduce would reverse that. I trust that in seeking leave I shall have the full support of the House.

I beg to move:

That the Postmaster-General be authorised, as provided for in section 5 of the Post Office Act 1961, to make payments out of the Post Office Fund in the financial year ending with the 31st March 1968.

This is an occasion in the year when I come to the House in my rôle as company chairman of one of the biggest commercial organisations in the country. It is my task to report to the House on the achievements of the Post Office in the financial year now coming to an end, and to outline prospects for the year to come. Like any other company chairman, I should like to be able to report substantial profits, a buoyant return on capital, and a dividend of even better service for the coming year. However, during the past year the return on capital was, for a number of reasons, not so good as we would have wished, and service, while generally improving, still leaves some room for improvement in a number of places.

We have earned 7·8 per cent. overall on capital. This is only a little below our target of 8 per cent., but the predicted return on capital for 1967–68 at 7·4 per cent. leaves no room for complacency. I shall describe some of the steps we are taking to improve the productivity of both sides of our business. Over the whole five years—the target was fixed for five years under the Conservative Government—we will have fallen short of 8 per cent. return on capital on the postal side, although not on the telecommunications side. We fell short on the postal side mainly because the increases in tariffs needed to make good shortfalls in the first two years of the five-year period were rejected by the Government of the day. This means that during this five-year period the Post Office will have generated a fair amount of its own capital requirements.

When any business organisation finds that its profit or return on capital is falling, there are three things that it can do: it can put up its prices; it can reduce the quality or quantity of the product or service it sells; or it can increase its own internal efficiency and productivity. When one is operating a monopoly like the Post Office, it is only too easy to put up prices or reduce the quality of the service, for the customer is captive and cannot go elsewhere for his stamps, postal orders or telephone calls. In a Parliamentary democracy there is also a temptation on the other hand, to maintain the same service at the same prices through fear of unpopularity and thereby driving the service into the red by selling below cost.

The course which I propose to adopt is the third, that of improving internal efficiency, and I intend to show later in my speech what measures the Post Office now has in hand to do just this. I do not want to raise any false hopes that I will be able to hold prices down indefinitely—I am no magician—but one thing I promise: there will be no general tariff increase until I am absolutely satisfied that the Post Office machine is running as efficiently and as profitably as possible. But before going further I would like to say a word about the longer-term financial outlook of posts and telecommunications in turn.

The main characteristic of the postal service is that it is highly labour intensive. This means that it is particularly vulnerable to wage inflation. By contrast, when wages are kept in check, as they have been during the past nine months, the postal service is given welcome respite.

The great difficulty confronting posts is that a very large part of the work offers little or no scope for increased mechanisation. In fact, about 40 per cent. of postal costs are incurred in collecting and delivering mail. We just cannot mechanise the postman who walks up the garden path every morning. Thus the postal side of our business will retain, though to a decreasing degree, a built-in sensitivity to wage inflation. It is also likely to continue to suffer from recurrent shortages of labour in the Midlands and the South-East—though the Government's policy of redeployment has brought a welcomed improvement in this situation, although not in all areas and certainly not in the South-East.

This rather difficult long-term prospect is not altered by the fact that posts will be making a profit of £4 million this year and are likely to do so next year. Indeed, when considered in relation to income and expenditure of about £340 million, this profit is not very great at all. Of course, posts, like other parts of the Post Office business, are affected by our obligation to provide a basic service throughout the country at common tariffs. In many rural areas the cost of delivering a letter far exceeds the 4d. which we charge for it. This to a large extent explains the fact that the profit margin is little more than 1 per cent. of turnover. I shall say something in a moment about the steps we are taking to improve the profitability of the postal side of our business.

On the telecommunications side the problems are very different. Here, too, there is a large labour force, but the scope for improving the design, performance and profitability of the capital equipment which lies at the heart of the service is very great indeed. However, good equipment and good labour techniques can be prevented from producing a good financial performance if they are not accompanied by sound pricing policy. At the moment our price structure is grossly unbalanced. It is this more than any other factor which is casting a blight on the telephone service's financial performance.

The nub of the problem, this imbalance, is that the inland telephone service has been carried for years on the profitability of trunk calls. Local calls and business and residential rentals are all running at a loss and, if present charges remain unchanged, they will continue to do so. The effect of this tariff pattern is that, when trunk traffic is buoyant, the overall profit is large enough to achieve our target return on capital, despite the losing services. When the rate of trunk growth falls, the performance of the entire service reflects this, and we know from sad experience that trunk traffic is particularly sensitive to any reduction in the level of business activity. In the business world the first economies are usually on trunk calls. This means that the telephone service has too many eggs in one basket—a very foolish position to be in.

What we must do is to put our tariff structure on to a sound footing to correct the imbalance, so that every service pays its way. We made a move in this direction at the beginning of this year by increasing call office charges while reducing the cost of cheap-rate trunk calls. A further major operation is required to correct the imbalance at some time in the future. I do not think we can really get the Post Office finances on a sound footing until this very large operation is carried out fully.

Now I would like to turn to some of the ways in which we are making a determined onslaught to step up our efficiency and our productivity. The telephone side offers some excellent examples.

STD is now available on three-quarters of the telephones in this country. We are also replacing the remaining local manual exchanges. By the end of this year, fewer than 3 per cent, of subscribers will be connected to manual exchanges, and there will be none at all after 1970–71. If it were not for this automation programme, the cost of providing telephone operator services would increase by £4 million in each of the next two years; and the cost to the public of making calls in the old way would be some £12 million higher each year.

We are also widening the scope of the existing S.T.D. system by developing what is known as the transit network. At present, subscribers on S.T.D. exchanges can dial on average only about 80 per cent. of their calls; the rest have to go via the operator. To enable them ultimately to dial all the exchanges in the country, we are planning to install 36 special trunk exchanges throughout the country at a cost of £6½ million. A new network of trunk lines will join these exchanges. We have ordered the first of these, and savings will start to build up from 1968–69 onwards as the number of calls which have to be handled by operators is cut down. When the transit system is completed in 1972, it will produce a saving of about £12 million a year, and the public will gain from having full access to the cheaper and quicker S.T.D. service.

We are also making wide-ranging changes in exchanges to improve efficiency and reduce costs in telephone operating. The turnover of staff—especially of young girl telephonists leaving to marry or for other jobs—is very high, and training is a significant item in the operating budget. By using programmed learning techniques, which cut the period of training by about a sixth and which we are pioneering with full staff co-operation, we hope to save up to £1 million per year. We are also starting to simplify some time-honoured procedures in handling calls, with a saving of a further £1 million per year.

In the longer term, cordless switchboards, which are now gradually coming into service to replace the older "plug and cords" switchboards in public telephone exchanges, will reduce the time taken to connect calls via the operator by up to 25 per cent. Clerical processes are also being reviewed by O. & M. techniques and savings so far are about £½ million a year.

On the engineering side of the telecommunications business there are also striking examples of the progress we are making. We have successfully introduced the first production electronic telephone exchange, which I opened at Amber-gate in Derbyshire in December, and will be installing another 30 or so this year, to come into service in 1968. This type of equipment is intrinsically more reliable than the old electromechanical system and its high switching speeds offer a whole new range of facilities and advantages. Yet much less maintenance will be required, and thus we will significantly reduce demands on our skilled manpower, and, at the same time, we will lower running costs.

On the transmission side, more and larger capacity coaxial cables are being used. The capacity of radio links too has been increased. By measures such as these, the cost of each added trunk circuit has been reduced by about one third since 1964.

Pulse code modulation systems, which will increase the capacity of other existing short-distance cables, will be put into regular service within one year from now, and we are starting an experiment soon which should lead to further reductions in the cost of these shorter lines.

We are putting considerable emphasis on improving the maintenance of existing plant, and early detection of faults. For example, in exchanges we are providing more automatic testing plant, and plan to introduce new equipment that will detect failures automatically and take the line out of service.

In co-operation with industry, we are taking advantage of value engineering techniques to cut the cost of equipment. The application of these techniques to the telephone instrument has enabled us to reduce the cost of its manufacture by 10 per cent. For example, we have discovered that in the dial we can reduce the number of parts from 101 to 30, and reduce the number of screws from 30 to three.

We are also making great strides in putting our engineering manpower to better use, so much so that we now confidently expect to be able to increase the size of the telephone system by about 50 per cent. in the next five years or so, with little or no growth in our engineering labour force. This will be the measure of our success. It says much for the sense of responsibility of the unions that these improvements in productivity have been made possible with the fullest co-operation of the staff involved.

Some of these improvements in the telecommunications and engineering fields are the fruits of our research and development groups. Others are the work of the efficiency groups we have set up to run the rule over the whole of our activities. At the local level, efficiency is being stimulated by service and productivity improvement plans which will, among other things, set new and better quality of service targets for individual telephone exchanges.

Similarly, the postal side offers many opportunities for increased productivity though—as I have said—it will remain labour intensive to a considerable degree. Our attack on this problem is two-fold: to mechanise wherever we can with profit and elsewhere to make an intensive drive to improve management and operating methods so that each man employed can make a maximum contribution to output.

Mechanisation of postal processes has proved difficult. But we have set on foot an ambitious programme, which makes us a world leader in this field.

We have not sought to mechanise indiscriminately, but only where it will show profit. Schemes so far introduced have shown a return on capital of more than 10 per cent. The most dramatic changes in mail handling are, however, just starting with the new coding desks and automatic letter sorting machines which I have described to the House before. These machines, which code-mark and sort letters with minimum human processing, are now going through their final trials at Norwich, which this year will become the first fully automated sorting office in the country. If all goes well we shall embark on a programme of equipping our 75 largest offices with these machines.

We plant to spend £45 million in the next 10 years on sorting office mechanisation and more than half will be invested in the new coding and automatic letter sorting machines. We expect this investment to produce a return of 25 per cent. and substantial economies in manpower. By the end of the 1970s, upwards of 75 per cent. of letter mail and practically all parcel mail will be sorted mechanically.

We are also increasing the number of staff trained in the latest management techniques of work study and operational research. By improving operating practice, providing better performance measurement and control, and generally raising management efficiency we are confident that we can significantly improve productivity.

These activities apply to the Post Office counters as well as to the mail service. Here the task is to adjust our counter staffing to local customer needs, so as to avoid excessive queueing on the one hand and waste of staff time on the other.

To bring all these efforts together at the effective management level and ensure that they pay off in the field, we have introduced a system of postal operations improvement plans, and we are extending arrangements under which managers are called upon to set themselves challenging targets for the period ahead. This will provide stimulus for individual managers. They will be assessed in the light of their achievements, and their future advancement determined accordingly.

These measures will be complemented by an overhaul of the pattern of local postal administration. We have in hand a plan for the rationalisation of the postal administrative centres throughout the country which I hope will be completed and implemented within the next year or two because so often the present pattern was laid down 50, 60 or 70 years ago.

As on the telecommunications side, I should like to pay tribute to the splendid co-operation we have received from the unions in all our efforts to improve productivity.

I will now comment on our use of computers. About £4 million worth of them are already installed and working. Others, worth £3 million, are on order. By 1971, we shall have 20 large, modern computers in operation.

One of the biggest computer jobs we have tackled so far is telephone accounting. Already some 9 million bills a year are produced by computer for customers in London. In about two years' time, when this system will have been developed to serve the rest of the country, we expect it to save over 2,500 clerical staff.

Could the right hon. Gentleman tell the House about the nature of these computers? For example, are they British-built or imported computers?

The Assistant Postmaster-General, who will be replying to the debate, will give the hon. Lady that information. We are short of time for this debate and I do not want to delay the House by giving information which my hon. Friend may need to detail later.

Other computer projects, covering a wide range of tasks, should bring total savings in posts and telecommunications to over 12,000 staff in the next few years, and I doubt whether any other concern in the country could do better than that.

But we are not proposing to use computers solely to save staff, essential though that is. We shall be using them more and more to help manage our resources of lines and exchange equipment, to plan our postal motor transport services and to improve the circulation of mail across the country. The National Giro of course will be fully computerised from the start. The Post Office is, and intends to stay, in the forefront of developments in computer technology and its practical application. Moreover, it is well fitted to do this since it numbers among its staff one of the biggest civil forces of systems analysts and programmers in the world.

Before closing, I should like to make an announcement about something of great importance in the context of improving Post Office efficiency which has been my theme this morning. It concerns the top organisation of the Post Office.

About 10 days ago I presented to Parliament a White Paper on the prospects for 1967–68, in which I said that the traditional Civil Service pattern or organisation is not best suited to what is in effect the biggest service industry in the country.

At present we have a Deputy Director General for Posts and another for Telecommunications. Their titles define their responsibilities but they do not have full authority to match these responsibilities. I am making a number of changes to put this right and the first of these will be made next month on the retirement, due to ill-health, of the Engineer-in-Chief. I shall then introduce a new organisation making it clear where, under myself and the Deputy Chairman, responsibilities lie for engineering policy.

The two Deputy Directors General will become Managing Directors, one for Posts and the other for Telecommunications. The post of Engineer-in-Chief will be replaced by one for a Senior Director of Engineering, who will not be directly answerable to the Board although he will be on the Board. He will be responsible to the Managing Director (Posts) for postal engineering matters and to the Managing Director (Telecommunications) for all telecommunication engineering matters. A Senior Director of Telecommunications will be responsible to the Managing Director for the non-engineering aspect of internal and external telecommunications.

These important changes will be followed by others affecting the Post Office from top to bottom over the next 18 months. In dividing up the common service departments, the guiding principle will be to give each of the two businesses its own supporting services where this can be done without unnecessary and costly duplication. In some cases, the common services will be completely split between the two businesses and come under the two Managing Directors. In others, for example in the case of finance, a small central department will remain under the Board. The present all-purpose regional organisation will in most cases be ended, and will be split into separate Postal and Telecommunications regions. The object of all these changes will be to enable managerial drive to make itself felt throughout the whole structure from top to bottom, from Managing Director down to field level.

These changes will begin the process of creating a more dynamic coherent and purposeful management structure in the Post Office. The object will be to group people together according to the tasks to be done rather than the grades and hierarchies to which they belong, to place the process of decision-making closer to the point of implementation and to make that process quicker and surer in operation. It will speed the drive to give better service and improved productivity.

Could the Postmaster-General say whether these very important structural management changes follow the exact pattern of the McKinsey Report?

There is no McKinsey Report. McKinsey's, who have been working with us for some time and should end their association at the end of the month, have been reporting to me regularly, but there is no such thing as a McKinsey Report. The changes broadly follow McKinsey's recommendations, but not exactly by any means.

I hope that all the major managerial changes will have taken place by the spring or early summer of 1969.

I do not want to leave the House with the impression that Post Office management is bad. This is very far from being the case. Nor would I like it to be thought that this reorganisation is a reflection on Post Office engineers. As I said recently, they are a very talented group of people and I believe they are one of the best groups of engineers in the world. There is no reflection on them at all. It is simply that in a growing industry like telecommunications, with its dependence on technological advance, the place of engineers in the Post Office is assured and will undoubtedly grow, but it must be made clear that they are part of an organisation which is responsible to the Managing Directors and, through them, to me.

Because the Post Office is still part of the Civil Service, and because I must not anticipate Parliament's approval of the proposed change in status of the Post Office, I am making these changes within the context of the Civil Service, and they have been agreed by my right hon. Friend the Prime Minister. No doubt they are not the ultimate organisation which the Corporation will want, but I hope that they will be regarded by the House as a very valuable move towards it.

I am quite sure that, with a modernised management structure, and with the continued efforts I have been describing to achieve greater efficiency and greater productivity, the Post Office will be able to give an even better service to the country in the years to come.

Last year, this Motion was moved on the eve of greater things, on the eve of battle when everything was in a rush. The White Paper on Post Office prospects had been published literally only minutes before the debate, so we did not expect a great discussion. This debate has in years gone by varied in its length from five hours to five minutes, and I suggest that as this is a crucial year and as we have this morning a somewhat longer amount of time we should have a rather longer debate. I am glad that the Postmaster-General has used this occasion to give us a very full account. We are very grateful for all the information given to us, and before the debate is through we shall try to extract more.

It is of immense interest to everyone, and especially for those working for the Post Office, to have some idea of the Parliamentary programme in relation to the Department. We have had the White Paper on prospects, and a week or two ago we had the Report of the Select Committee on Nationalised Industries. We were told that we would have a White Paper on future organisation before Easter. We will presumably have a debate on that, coupled, no doubt, with the Report of the Select Committee some time after Easter. I do not ask for exact dates, I seek general guidance only.

After that, will legislation be expected in the autumn? If so, I assume that it will be fairly long and complicated. Does the right hon. Gentleman see it going through the autumn, with the Queen's Consent in the New Year, and vesting date—when? These things are of some importance, especially to those in the industry because they need to know where they are and how long they will have to wait before knowing their fate. I appreciate that every effort is being made and that staff relations in the Post Office are good, but this is inevitably a period of great worry for everybody working in it, in whatever grade they may be.

A period of takeover, whether it be of this sort or a business takeover, cannot help but be a time of worry. There is bound to be worry about redundancy and the changes that will take place. I agree that fears about redundancy should not be very great, from what we know of staff shortages, but in almost every other aspect those working for the Post Office will have misgivings and fears. The Post Office has published pamphlets giving employees a certain amount of information, but the uncertainty is still there, and there cannot be too much reassurance given to the staff during this handover period. The Assistant Postmaster-General might well use this present occasion personally to repeat the reassurances already given, and relieve any remaining doubts there may be.

I have been in touch with various Post Office employees and I know that they would like reassurance as to their exact position up to vesting date. They would like to know when vesting day will be. The Post Office staff continue to be civil servants until then. What rights have they to recourse to the Civil Service Arbitration Tribunal? We are told that negotiations on conditions of service will start after the Royal Assent has been received, and that is why the date of that Royal Assent is very important to these people. What is important to them is to know exactly what is happening now. Consultations are obviously taking place. Is it possible to give month-to-month information on how the consultations are going, or are they so private that that cannot be done?

I say that because I have received a letter, which is probably representative, which says this:

"… rumours … are rife predicting loss of annual leave, normal service extended to 65 years of age, telescoping of grades, etc., and the most disturbing aspect, was that in common with"

the official of the union in question

"he seemed prepared to accept these retrograde measures, his only reassurance being that we could be sure that such loss of conditions of service would be at a price.

We are deeply concerned that our own national officers should talk in this way and yet feel unable to disclose anything of the negotiations now in hand. The more so since, as I have already said, the changes proposed have not been voted on in Parliament, nor have we, the staff, had any opportunity to approve or otherwise."

I obviously do not comment on how justified these worries are. They are, however, the type of worries which are being voiced, because this is not the only letter I have received. It would be worth while for the Postmaster-General to use this occasion to try to put these worries at rest.

I have been asked this question on the matter of Civil Service status. If a Post Office employee wishes, when the time comes, not to lose his Civil Service status but to move to another branch of the Civil Service, will he have the opportunity to do so? There is in the Civil Service a certain indefinable sense of privilege which is much valued.

It is important to know how security of tenure will compare with present conditions. There is a feeling that in the Civil Service there is an extremely sound basis of security of tenure. Under the new system will the basis be as reassuring?

I have been asked whether superannuation will be contributory or noncontributory. If contributory, a pay rise would presumably be implied. If so, what about the freeze? People are clearly frightened of how pay will be adjusted in conditions of freeze.

Is it too early to start talking in any detail about grading structure and annual leave'? Will there be a new basis for the leave allowance for grades fixed in accordance with Civil Service grades? I do not expect detailed replies to these questions. I am listing the matters which have been brought to my attention and which seem worth airing and getting assurances on, if possible.

By the very nature of events people are obviously worried. I do not know from the Report whether this is a tactless time to start talking about innovations. The Report of the Select Committee shows how important it is for the Post Office to try to get more part-time workers and women workers if they can be accepted by the unions. The emphasis on the problems of peak work makes this industry ideal for part-time work. Part-time work is ideal for the Post Office. It is an ideal outlet for many thousands of good people who need more money and who want part-time work.

One of the tragedies of the S.E.T. is that it hits part-time work, which is the most efficient work there can be. I dare say there are many lazy people doing full-time work, but there are very few lazy people doing part-time work. Part-time workers have only gone there because they want to work and earn money. While great changes which have to be made are being made, if we could come in on that tack it would be of great value to the Post Office.

I should like some clarification on one statement on the Report of the Select Committee which I do not understand. The Report states that Post Office recruitment has been handicapped by the Civil Service framework within which agreements have to be made.

There is so much in the Report of the Select Committee that obviously this is not the occasion to debate it. The Report will be our bible and work of reference in the coming debates, especially that on the White Paper. As the Chairman of the Select Committee is here, may I say how much I admire the product of his Committee. I am sure that all hon. Members are grateful to the hon. Gentleman and to his Committee for producing it at such an appropriate time. If I have any complaint, it is certainly not a complaint about the working of the Committee or about the personnel who took part in that work. My complaint would be about the nature of the Report. Apart from the Chairman with his professional background, on this occasion the investigators have been too much like us. They seem often to have gone through the circle of the same arguments; they have seen the same difficulties; they have come to the same conclusions. Perhaps this is because those are the only conclusions which it is possible to come to. There is not in the Report the breath of fresh air or the new look that I had hoped would be there. There is, perhaps, a new look, but what we want is a look from a new angle.

The Government made a wise decision in appointing McKinsey's in the early days. I am sure that the Post Office must have been a treasure trove for this firm, treasure comparable with the North Sea findings. The Post Office as it stands must be the answer to a consultant's prayer. It is a super-massive organisation; it has a turnover of £700 million; it has an annual capital expenditure of £200 million; it has 400,000 employees. The Post Office has gone peacefully along for 400 years unstimulated by competition, as the Postmaster-General has wisely pointed out, and unfertilised by talent from outside the Post Office until the appointment of Mr. Wall. It is a labour-intensive industry with good industrial relations. At the moment when the firm started work it had been almost agreed that a structural change was scheduled and ready. McKinsey's could hardly have come in on a better scene. Any firm of consultants, especially a firm of such a calibre, could not but expect to make a pretty startling impact.

So far we have merely known that McKinsey's are there. We have only in a half-hearted way asked for reports on their progress, because we know that consultants take their time. We know that from the bills they send in. Results are not achieved overnight. This is not a routine investigation to keep the Post Office up to date. It is an investigation which should have a tremendous impact and influence on the future shape of the Department.

So far we have said that it is impossible to have a report from McKinseys which is publishable. However, it would be interesting to see some before and after examples in some detail. This would reassure people that things are happening in the Post Office on a bigger scale than a normal improvement, although that in itself would be good. The Report of the Select Committee occasionally indicates areas where McKinseys should be of great help. It also contains traces of where obviously the firm appears to have had some effect.

For instance, it appears from page 23 of the Report that the Post Office statistics for postal services are not particularly good. This is serious. With an organisation as large as this, if a statistic is only a small fraction of a per cent. out it will be multiplied to such a degree that the fault will in the end become huge and costly. I imagine that on this matter a consultant firm like McKinseys can be very effective.

The whole chapter on tariff policy seems to show up what I would call by modern standards a pretty rough-and-ready costing. Proceeding along the route of rationalisation which the Postmaster-General is now taking, a system of costing is desired in which there is great confidence. We want to be right up to the modern methods. We have all studied and followed the progress of mechanisation in the Post Office and we are all interested in the experiments, and so on. In modern business, the thing that is getting it ahead, and which is enabling it to make progress, just as fast as mechanisation and computerisation, is far better planning of the performance of the human being. The measurement of and reward for human performance is something which has developed tremendously in business over the last five years.

I welcome the progress that one sees in this Report, especially on page 149, where we read:

"In addition the McKinsey consultants have recommended a new system of staff assessment on the postal side based on performance and financial results. The particular points to which the consultants have drawn attention are cost control and the identification of improvement oportunities."

That seems to me to be very important indeed. The next paragraph says:

"The existing system of staff appraisal, which has been developed in consultation with the staff sides, hinges on personal attributes rather than the specific achievements of staff. However, recent proposals, including those made by McKinseys will lead to a shift of emphasis here which will be helped by the use of performance targets, the forming of local improvement plans, and the periodic definition of job objectives."

That is highly commendable and is the sort of way that we should be going.

I had always thought until the last few years that industry had been somewhat backward in this respect. I used to think that the Army did better at this. In the Army one never did anything before one knew what the object was and before one had all the information. But in the more backward firms of industry, people are far from clear about what are the objects and targets. I am glad to see this sort of tendency coming into the management side.

In the Report of the Select Committee we are told that the Industrial Reorganisation Corporation will look into the question of relations between the telecommunications side and the industry. Perhaps we could hear a little more about that.

I should like to finish by firing a few questions from the Report of the Postmaster-General. All these Questions will be on the postal side. One of my hon. Friends, if he catches your eye, Mr. Speaker, will be talking about the telecommunications side.

On the question of the conveyance of mails, I was impressed, on reading the Report, by the immense dependence on British Railways. Apparently 75 per per cent. of all letters and 91 per cent. of all parcels go by British Railways. Of this huge bill of £22 million—nearest account to that is about £1 million for the airways—the huge preponderance of costs falls on British Railways.

I should like to know what effect the reorganisation of the railways has had. In other words, has the reduction of the linage over the last few years made a great difference to the Post Office, or not? What has been the effect of the improvement of some of the lines, such as the electrification of the service to Manchester? Has it taken a lot of mail off the airways and on to the railways, like it has with passengers?

Can the Assistant Postmaster-General tell us a little more about the experiment in East Anglia, which is referred to in page 25 of the Report. It says:

"As an experiment, the Post Office are using their own vehicles for carrying parcels to East Anglia. The Post Office claim that this has proved a better and cheaper service and that costs are lower than rail costs under the pre-January, 1965, Parcel Post contract. The experiment has also enabled the Post Office to have the railways national conveyance charges reduced by £3 million to £4 million a year. Elsewhere road services are used mainly for local distribution and for routes where there are no suitable rail services."

Does this mean that where rail services were available an experiment was tried using the Post Office's own vehicles and that a great reduction or saving resulted? If that is so, can the Assistant Postmaster-General tell us whether further experiments will take place? Can he also tell us whether it shows that British Railways were, in fact, overcharging in the past? Because of this bargaining power of being able to use one's own vehicles, it would appear that it was found possible to force the British Railways to reduce their charges.

Another very alarming thing that comes out of this chapter on conveyance of mails is, of course, the standard of service provided by British Railways. I am bound to say that this is astonishing, because it says:

"Although the Post Office expressed reasonable satisfaction"—

I am surprised that it did—

"… with the service provided by British Railways for letter traffic, they were not satisfied with the punctuality of mail trains. In January to June, 1966, only 34 per cent. of travelling post offices ran to schedule and 19 per cent. were more than 20 minutes late."

That seems incredibly serious—

"The consequences of such delays are serious because the letter service depends upon a 'closely integrated network' of mail trains and failure to make connections on time not only dislocates the service but also causes mail to miss a delivery."

It goes on to say:

"While claiming that the majority of mail trains had a good punctuality record the British Railways' witnesses admitted that the crucial service between Euston and Glasgow was 'most unsatisfactory.' This particular train was on time at Glasgow on only 10 out of 150 journeys between January and June, 1966;"

I wonder whether the Assistant Postmaster-General could tell us how long this situation has been going on, and what sort of improvements are taking place.

It goes on to say:

"There was no single cause of this unpuctuality, but British Railways hope that electrification and re-routing will produce some improvement by March, 1967."

March was the month in which we debated this matter. I wonder whether the Assistant Postmaster-General can give us details of any report that has arrived on his desk which might give us better news.

On the quality of service, on page 30 we are told that this was deteriorating.

It says:

"The Post Office admitted to your Committtee in February, 1966 that the general quality of services was deteriorating."

On the other hand, the White Paper entitled "Post Office Prospects," says:

"Some improvement has been made over the last twelve months and further progress in this direction is one of the aims of the Post Office for Quality and Reliability year.'"

I take it that we are in the "Quality and Reliability Year". Did it start at the beginning of the year, on 5th April, or when? Perhaps we could have that small piece of information.

On the question of mechanisation, what the Postmaster-General had to say about Norwich was extremely interesting. I believe that the test was due to end in February, 1967, which is now. Do I gather from what the Postmaster-General said that this test has proved a success? Is there a report on this matter, which might be of interest to hon. Members? It seems to be a technical matter, but it might be of interest to read. If it is a success, is it likely to be multiplied in accordance with the money to be spent?

Incidentally, as a Yorkshire Member, may I ask a question which is important to quite a big lump of Yorkshire? It was said that a sorting office was to be established above Leeds City station, or that this was being considered. Has this been built?

Other hon. Members will want to speak, and we are not treating this as a debate on the Report of the Select Committee, but more as a preparatory and probing operation to clear the deck for the big debate which is coming, on the results of which so much will depend, both in respect of postal services to the public and in respect of the lives and prospects of the 400,000 good people who give us these services.

I desire first to express my thanks to the hon. Member for Howden (Mr. Bryan) for the most kindly references he made to the work and report of the Select Committee on Nationalised Industries, and I am sure that my gratitude and pleasure will he shared by my fellow members of the Committee.

As the hon. Gentleman said, this is not an occasion on which we ought to debate that Report. We ought to have a go at it later when we have also got my right hon. Friend's White Paper on changes proposed in the structure.

The hon. Gentleman criticised the Report for being of a piece with our own work without a real breath of fresh air. Far from resenting that criticism, I think that the hon. Gentleman is right, and, if I may say so without sounding horribly condescending, which I do not want to be, I thought that it was a very shrewd observation and analysis on his part.

Being wise after the event, if we were having another go at the job, I think we might look at fewer subjects in much greater depth, rather than at so many subjects in less depth. The great advantage of a consultant, which the hon. Gentleman hinted at more than once, is that he comes into an organisation with a fresh mind and he can see the wood for the trees. The chaps on the job, who have the responsibility of day-to-day decisions, with three telephones on their desks all liable to ring at any minute, are tied down by the trees. The consultant, without any obligation for day-to-day decisions, comes in without having to poke down to every bit of detail, and can take a broader view because he is not cluttered up with details. I feel that if we were doing this job again we might avoid climbing up so many trees as we did on this occasion, and might therefore get a clearer overall picture of the wood.

I make only one observation on the suggestions made by my right hon. Friend for changes in the management structure. My right hon. Friend has had to do an extremely difficult job, because in creating a management structure for an organisation like the Post Office, or in changing such a structure to meet such greatly changed circumstances as are created by the change in status as well as all the other changes which one wants to make on their merits, there are no absolutely right answers.

Every method which my right hon. Friend could have brought forward would have had some advantages over all the others, and some disadvantages compared with all the others. It is a very delicate decision to make, and it becomes even more delicate in an organisation which is running two very different industries, one which is highly capital-intensive, and one which is highly labour-intensive, one which is up to the very last minute of our technological advance, and one whose methods have not changed enormously for a century or so.

There was one school of thought which considered that we ought to divide the two things into two separate corporations. I think that my right hon. Friend's decision not to take that view was the right one, and that a good deal would have been lost by that totality of separation. At the same time, I think that this division of operational responsibility and operational accountability, the unblurring of some of the blurred frontiers between the two parts of the organisation, which my right hon. Friend has announced this morning is altogether to the good.

It struck me, as it manifestly struck my right hon. Friend, that the situation of engineering without direct responsibility to those who had to run and show a profit on the sevices for which the engineering was being supplied was altogether too hazy, and I am sure that my right hon. Friend is right.

I think that my right hon. Friend will have some administrative trouble, no more than that, in taking that degree of separation down to the regional level where the intertwining becomes very complicated indeed, and where it really will be impossible to separate the Siamese twins without supplying more blood and bones, in other words, without increasing the overheads by adding more executive staff.

On balance, I think my own predilection would have been not to carry the separation too far along at that level, but I concede that it is possible to take the other view, and that there may be very little in it as between the two views.

I look forward to a further and better occasion for going into some of these matters in detail, and perhaps I might content myself with saying that I am sure that what my hon. Friend said this morning will be warmly welcomed by those who are to have the job of running this great enterprise and improving it even beyond its present standards which, generally speaking, are by no means too bad.

I agree with the hon. Member for Poplar (Mr. Mikardo) in what he said about the speech of my hon. Friend the Member for Howden (Mr. Bryan). I think it is probably true that if one can get away from the pressure of constant management one can get a clearer view and take time to think clearly about the problems confronting interrelated a structure as the Post Office.

I shall not pursue the hon. Gentleman's argument too far, because when he was talking about separating the Siamese twins, and supplying them with more blood and bones, I was a little worried about the biological implications of pursuing the matter very much further.

I think that this debate is of the greatest interest, because the Post Office finds itself in a curious position. On the one hand, it is reaching for the stars. Advances in telecommunications and in satellite communications present a story of progress and advance in modern techniques. On the other hand, we have to face the fact that the British public, the average post office user, the chap who uses his telephone either in his office or at home, the man who posts a letter either for business reasons or for purely domestic ones, are becoming more and more critical of the service which they are getting.

It may have something to do with the fact that the Report and Accounts which we are discussing are for the year ended 31st March, 1966, and here we are debating them on 15th March, 1967. Therefore, to a certain extent, this debate is probably out of date and hon. Members' suggestions and inquiries will probably be out of date and might already have been covered in some other sphere.

My right hon. Friend raised the important question of the dilemma of the Post Office's dependence on British Railways. The Report makes it clear that British Railways is not offering the Post Office a service which is all that could be wished. The Postmaster-General is accountable to this House and we can question him about the Post Office, but we cannot call here and question the Chairman of British Railways. Therefore, our dilemma is that we cannot find out from British Railways why it cannot offer the Post Office a more reliable service.

Running throughout the Report are references to staff shortages and the difficulties of getting trained and highly qualified staff. Before I entered the House—to some extent this is still the case—I was fairly closely involved in technical education. One of the colleges with which I was connected ran courses in telecommunications for Post Office staff.

Appendix 8 of the Report gives staff numbers by class, amounting to nearly 400,000 of one grade or another, and the constant references in the Report to shortage of trained and qualified personnel and the difficulties of obtaining them led me to hope to find a reference to some improvement in the training schemes available to the Post Office. There is implicit in these references to the difficulties an admission that the present system of intake is inadequate. It might, therefore, be advisable for the Post Office to consider providing its own training college.

The last three entries in Appendix 8, leaving out miscellaneous staff, relate to professional engineers, scientific and technical staff, supervising engineers and other engineering grades—totalling 105,209 engineers of one sort or another. In the new technological age, personnel will need constant refresher courses. With that large number of existing personnel and the need to train and retrain, the Post Office should be able to maintain a viable training establishment of its own to help meet the need. Two other classes, in this Appendix, postal and telegraph officers and telegraph and radio operators, will also need considerable training initially and retraining with modern advances in technique.

Another inadequacy of the service referred to in the Report is its inability to meet the demand for telephones. In the Introduction, we read:

"Much has been achieved, but the service is still not as good as it should be and will be. Demands for telephone connections cannot he met everywhere as they arise, mainly because of shortages of exchange equipment."

With our much more mobile society, people have moved about the country and the Post Office has been taken unawares that a large demand for additional telephonic equipment has grown up, particularly in the South of England. This could hardly have been predicted by the Post Office, since even the most critical subscriber does not expect the Postmaster-General to be clairvoyant as well as the "chairman" of a big public company.

But there should be some way of detecting much earlier the movements of population, so that the Post Office is not caught unawares. Some rudimentary liaison machinery was established some years ago with the planning authorities in the South of England, but this does not appear to have been enough. Another weapon which the Post Office could use to fight this problem is the Registrar-General's returns, which will show a useful pattern of population movements, as he is now taking spot censuses as well as the 10-year census.

If there is a large repatriation of Service men to this country—according to the Defence White Paper, about 20,000 men and 6,000 families will be involved—will the Post Office or the Services be responsible for the necessary telecommunications? If it is the Post Office, there will shortly be a far bigger call on its provision than we had thought—

All these married families coming back will represent another problem, in that they will need some telephone communication. Will they get it? We should want to know this, too.

This is another aspect of the problem; my hon. Friend is absolutely right. About 6,000 families are to come back, according to the Defence Estimates, and about £20 million has been provided for the purchase of private houses, caravans and mobile homes. Already, the Army is buying—certainly in my constituency—large numbers of private development houses. These problems will be acute if not faced early and a solution found.

I wish that the result of the opinion poll referred to in paragraph 92 could have been published in the Report, as it would have been interesting.

There is another reference on page 37 to the difficulties of obtaining staff, certainly in the Midlands and the South, but there is no reference to the employment of postwomen. One wonders whether it would not be possible to alleviate the shortages of postmen by at least considering the employment of post-women. I cannot find a reference to postwomen being employed. I seem to recall having seen postwomen and—

I have a two-fold aim in initiating this debate. The first is to ensure justice for several of my constituents and the second is to prevent the Government from being guilty, I hope unwittingly, of a grievous breach of good faith in their dealings with a local authority which has been prevailed upon to co-operate with them in alleviating a national problem.

The history of the matter is easily told. The Government and the L.C.C. wanted provincial areas to assist in overcoming London's housing shortage by expanding quicker than they would normally have done in order to take London's overspill population and thereby alleviate one of London's greatest problems. Although an established and traditional city, Peterborough, with two other towns, was invited to do this by doubling its size very quickly indeed under the new towns procedure.

There were, and still are, many doubts in many quarters about whether this will be a good thing for Peterborough. However, the scheme was presented by the then Minister of Housing and Local Government in terms which gave the impression that many benefits would flow from the Exchequer to Peterborough if that city co-operated. It was always emphasised that if, in the process of bringing the scheme to fruition, any anomalies arose which would be detrimental to Peterborough and its people, the Government would act with sympathy and speed to try to overcome them. That was the whole atmosphere in which the Government presented their appeal to Peterborough to help when the scheme was first suggested. It was in this atmosphere that Peterborough was prevailed upon to become the guinea pig; and the scheme is now under way.

I must tell the House that, very early on, the Government's good faith is being put to the test and that their first reaction to having to honour their obligation is very disturbing to me in the light of an anomaly which I wish to put to the Minister today.

In keeping with this expansion under the new towns scheme, an outside consultant was appointed by the Minister to prepare the expansion scheme in detail. That was the right course to take. Having started the process, that was, indeed, the right road to pursue. However, until the full details of the consultant's scheme are available, planning permission has had to be refused by the local planning authority to certain private developers because of the possible risk of these developments cutting across the ultimate overall plan which will be accepted. This has caused considerable hardship to local owners, and that should not be forgotten, although I acknowledge that hardship may be inevitable in some cases.

If one is to have an overall plan that takes some time to reach fruition, it is vital that any separate planning approval which one gives in the meantime should not cut across what the final plan will be. Thus, although this represents a hardship to some of my constituents, that is not the main point to which I draw the Minister's attention, although I hope that he will bear it in mind.

This hardship would be bad enough standing alone, but in the meantime we have had what I can only call the villainous Land Commission being made the law of the land. Under the new arrangements any developer must pay a 40 per cent. levy on increased values arising from any development which has not been approved and actually started before 6th April next. Those who have permission and have started on their schemes in other towns will not have to pay this onerous 40 per cent. levy. Several of my constituents would have been in that position had not a stop been put on their schemes arising from actions which flow entirely from Peterborough's decision to co-operate in the Government's overspill scheme.

If Peterborough had said, "No, we are not prepared to help with your scheme to help London. We will not be good neighbours", these constituents of mine would have submitted their schemes, would have had them approved, there would not have been a consultant's overall scheme for which they must wait, and they would have had their developments under way. They would not, therefore, have to pay the 40 per cent. levy which arises out of the Land Commission legislation. Now, because they cannot get their schemes approved, they cannot make a start before 6th April and they must pay the 40 per cent. levy—that is, unless I can persuade the Minister to grant them an exemption, as he can under Section 63 of the Act.

If the Minister, in considering this case, does not take steps to grant this exemption, then the present state of affairs will be iniquitous and I prophesy that it may well endanger the whole expansion scheme. I say this because, without local good will, this risky revolution in Peterborough could not succeed. And if, at this early stage, the Government's protestations about having sympathy in dealing with anomalies are shown to be a sham, all local trust will vanish, and so will the expansion scheme.

From the very beginning, when the expansion idea was first mooted—remembering that it has been undertaken by Peterborough at the request of the Government—there were strong feelings locally on the subject. Many people thought that Peterborough was making a mistake. It was only on the understanding that the anomalies and difficulties which would inevitably arise in such a scheme would receive the sympathetic consideration of the Minister of the day that many local people then agreed with the idea. The undertaking to give sympathetic consideration to any anomalies was virtually a promise when the matter was first put to Peterborough.

Extreme concern about the expansion itself being endangered arises because of the terms of a letter which the Minister of State sent to me on 1st March last after I had put the matter to him privately. I put it to him in terms which I thought would at once alert him to the need to keep the Government's promise to Peterborough, but the terms of his letter are disquieting. He said, in effect, that our fears might well be exaggerated because he gathered that by no means all planning consents were refused.

There is no exaggeration here. To prove it, I will give a few of the cases that are known to me, although they touch only the tip of the iceberg. We have the industrial sites in the Fengate and Padholme Road area of Peterborough. We have the Barrets' valuable corner site in Long Causeway, in the centre of the town, a valuable site where approval has been held up for at least 12 months. Then there is the site for flats at the corner of Thorpe Road and Thorpe Lea Road. There is another Thorpe Road site for 58 flats. We have had a large development in Bridge Street. I could give many of these examples, but the value of those I have already given is many tens of thousands of pounds. I believe that I have already given sufficient instances to show without wasting the time of the House, that there is no question of exaggeration in making this appeal.

The Minister made a second implication in his letter of 1st March. Though I paraphrase it, it is a true paraphrase, so I can quote it. What the Minister said, in effect, was, "It is just hard luck on your constituents. Morally, the increase in values before 6th April ought to be within the levy for everyone." I do not know whether the Minister thinks that he ought to have made the 40 per cent. levy retrospective. He is entitled to his own views on that subject. The thing is villainous enough as it stands, but it would have been even worse had he done that. But to push this question to one side, and to make this sort of statement—which impresses Parliament, which makes the laws—is not good enough.

It is not good enough to push the complaint off with talk that, generally speaking, and morally, certain things ought to have been done. The law says that a start of development before 6th April absolves the developer from the 40 per cent. levy. If my constituents have been prevented from benefiting from this provision because of a central Government scheme, they have been prevented because they were being good neighbours. This is an anomaly which inflicts hardship on the developers through no fault of their own.

If I were to let the case stay there, it would just be a matter of making a general appeal to the Minister to see what he could do. Fortunately, bad though the Land Commission Act may be, the Government put into it a Section allowing them to grant exemptions from the levy if anomalies and unfairnesses show themselves. Under Section 63, it is possible for the Minister to exempt from having to pay this unfair penalty people who are the victims of the sort of anomalies I am describing.

If ever circumstances warranted the Minister laying an Order exempting the developers from the levy then, with all the force and sincerity I can command, I have to say to the House and to the Minister that I cannot think of any circumstances more worthy than these for calling Section 63 into action. If that Section was not intended to rectify an anomaly as glaring as this, why did the Government include it in their Act?

I am not calling upon the Joint Parliamentary Secretary necessarily to give me any detailed undertakings today. This is not a propaganda debate I have initiated. I am quite certain that if, within his Department, he will read what was said and implied to the Peterborough authorities to persuade them to join in this good neighbour scheme—to join in the new Town scheme which, to some extent, mitigates against- their own previous separate local powers, because of the development corporation being set up; if he sees how they have tried to co-operate in the highest sense of good neighbourliness, and if he can recognise, as I have tried to show as clearly as I can, that through no fault of their own certain people are to suffer great hardship, and that in his own legislation he has been given the power to rectify such hardship, I think that, on the narrow ground of being fair and the wider ground of keeping his undertaking to Peterborough, here is a matter that ought to be looked at with sympathy and concern.

I therefore do not ask the hon. Gentleman for a detailed reply now. He will acknowledge my case, I know, with all the courtesy and skill he always uses in the House, but I cannot expect him, in an Adjournment debate, to give an undertaking that will clear this matter up right away. But I do ask him to accept the force of the case and say that he will have it examined in detail and fairly in the Department. I ask him to say that if what I have said can be substantiated by examination in the Department, he will give second thoughts to the subject in order to have the matter put right. I ask for no more than that at the moment, but I beg him not to attempt to try to slide over it with generalities which may not give the appearance of a negative.

I have brought this matter before the House as early as this rather than dealing with it by correspondence with the Department purely because of the date. This levy comes into operation on 6th April, and I felt that in view of the first reply I got—which, I hope, was sent unwittingly—I should put the whole thing on record here as soon as possible. In the interests of his own Department and of the relations we want to see between the central Government and the local authorities, I hope that the hon. Gentleman will say that he will have his Department look at the matter with sympathy, and with all the bias necessary to suggest that it will use Section 63 to put this anomaly right.

The hon. Member for Peterborough (Sir Harmar Nicholls) has put his case very forcibly and very clearly. I tell him at once that although I think the issues are very clear, and that what I have to say will be quite definite, one always wants subsequently to examine all that has been said in such a debate as this, when an hon. Member raises a very important constituency point. I can assure the hon. Member that if I have missed anything that he has said or any point that he has made, we will read the OFFICIAL REPORT very carefully and consider the whole gravamen of his charge.

The hon. Member has really sought to exempt from the betterment levy certain cases of building development in the City of Peterborough, where planning permission has, for the reasons he has given, so far been refused. He points out that if the developers are unable to start operations before 6th April they will become liable to assessment for development levy under the Land Commission Act, 1967.

As he has said, the background is the decision in principle of the Minister of Housing to expand the City of Peterborough under the New Towns Act in order to take this very large additional population of about 70,000 from London's overspill. This decision was announced in February, 1965, after long consultations with all the parties concerned, and a draft Order was laid in October, 1966, which designated 18,000 acres in and around the city. The hon. Member will be aware that a public inquiry was held in January of this year, but as we are still awaiting the inspector's report he will not expect me to comment.

I would say in regard to the first part of the hon. Member's case that, as far as I am aware, the relations between the Ministry of Housing, the Peterborough authority, the county council, and so on, are excellent. I do not think that any charges of bad faith have been made—

Not yet.

I want to put this on record, because I am not sure that the hon. Member was going as far as that. Perhaps he was anticipating making such a charge if I did not give the answer he wanted but that, again, may not be exactly how matters will work out. I can assure him that there will be the utmost good will and assistance that we can give from the centre to aid Peterborough in what will be a very considerable and exciting experiment in expansion, and one that will also be in the interests of Peterborough itself.

Following the decision of February, 1965, the local authority which had delegated powers from the county council, agreed to the policy of an interregnum on certain planning applications which came before it, as the hon. Gentleman said. That was done because immediately after the February announcement a very distinguished consultant was appointed, first to advise on the existing area, within and without the town, which should be designated for the site of the new town and, subsequently, to prepare a basic plan for expansion.

The policy of the authority was that, a consultant having been appointed, proposals affecting the existing town, and particularly the central area, should not be prejudiced, and there was therefore this interregnum on significant planning applications in the existing town. Possible developers were persuaded to hold up applications until the new proposals were known, and in some cases they voluntarily agreed to do so. That should be put on the record, and one is very glad that such agreement to defer has been possible.

In the second paragraph of his letter to my right hon. Friend, on 10th February, the hon. Member said:

"As you know, due to the proposed expansion of the city of Peterborough, an interregnum has been placed on many sites and buildings during the last 18 months which have either detailed or outline planning permission."

The hon. Gentleman is wrong about that —I am not altogether certain that that invalidates his general argument, but, for the sake of the record, I ought to get this clear. Since the hon. Member put down this subject for discussion, I have naturally made some inquiries, but I do not think that there are any cases in which detailed permission has been given and which could have been affected by the moratorium.

The legal position is that once detailed planning permission has been given, that is that. I suppose that it would be possible for an authority again to have negotiations, but once planning permission has been allowed, it is a matter for the developer. In the short time at my disposal, I have not been able to go into the matter exhaustively, but, in general, I think that all the significant applications, some of which the hon. Gentleman mentioned, have not been affected by the interregnum policy when outline planning permission has been given. It may be so in one or two cases.

I suppose that there are 11 that could be called significantly large-scale applications to develop within the area under discussion and, from a very quick perusal, it seems that permission has been refused at a preliminary stage. Incidentally, one is now the subject of an appeal to my right hon. Friend, so I cannot say anything about that, but even in that case it was an outright refusal of the scheme as a whole. I should make that clear, because at least it makes the issue much simpler.

I do not think that the hon. Gentleman disagrees with the policy of the interregnum. Obviously, if one has a master plan for an area, it is absurd to allow planning permissions and then either have to buy back those permissions at inflated compensation prices, or acquire the land in respect of which planning permission has been given. The hon. Gentleman is arguing that because of the action of the planning authority in asking for deferment for at least a year, and sometimes longer, no operations could start and so levy will be payable.

This is a very natural argument for any hon. Member to make on behalf of his constituents and I am sure that if I were in the hon. Gentleman's position I would be making the same sort of plea. However, if he considers the matter, I think that he will realise that it is an extremely difficult thing to do, even under the provisions of Section 63 of the Land Commission Act. Perhaps I should explain why that Section is there. We are here dealing with a levy upon betterment value, that is, the difference between the existing use value of the site and its value when a planning permission has been given, although betterment may arise in some other way.

This is a matter of the raising of revenue and the body responsible will be the Land Commission. On the canons of good government which most of us in the House would accept, it would be impossible and intolerable when dealing with the raising of revenue to have any variation, either in the rate of the levy, or in its application, except by the decision of Parliament itself and, therefore, the Commission will have no discretion either to make exemptions or to decrease the rate of levy. Those will be matters to be determined by both Houses of Parliament.

However, when the legislation was being framed, it seemed that there might arise some kind of occasion—I suppose that it might be associated with a large-scale disaster—when the Government themselves might want to take action and where there might need to be rebuilding. Without Section 63, the only thing which the Government could do would be to promote special legislation to meet that kind of case. That would seem to be a lack of foresight and there is, therefore, an ultimate reserve power in the Act so that the Minister can lay an Order, which would have to be affirmatively approved in both Houses, making the exemption. That is the sort of occasion on which Section 63 could he used. It was never intended to be applied to a small number of cases in circumstances of the sort which the hon. Member has outlined.

I agree that it has to be something significant and separate from the normal flow of things. The expansion of Peterborough, Ipswich and Northampton was announced by the Minister himself as the first of its kind ever to be tried. He said that they were guinea pigs and that the Government wanted to see how the scheme worked. It was a significant departure, he said, from anything which had gone before. Surely that justifies a separate distinction and the application of this Section.

At this stage, I shall have to differ from the hon. Gentleman about the constitutional meaning and application of the Section. Even if it had been intended to cover cases of this kind, there are other considerations which would have to be taken into account. Whether building operations start before 6th April depends on a number of factors. Failing to get planning permission is obviously one.

Even supposing we accept the hon. Member's plea and agree tha tthis Section can be worked—and I think that we would be constitutionally challenged if we attempted to use it—it would be impossible to say that the only reason why building operations had not started—so that the development was therefore not liable to levy—was failure to obtain planning permission. One would have to know whether the land was available and whether it could be transferred in time, whether the financial arrangements were all right and whether all the developers would agree. Administratively, that would be almost impossible to determine.

One has to fix a particular date. Frankly, if we could have made the date much earlier, we would have done so. It was to be 1st March.