§ Motion made, and Question proposed, That this House do now adjourn. [Mr. Peel.]
§ 10.0 p.m.
§ Mr. W. R. Williams (Manchester, Openshaw)
I am very grateful to you, Mr. Speaker, for providing me with an opportunity to raise a matter which I regard as of substantial public importance, namely, the introduction of a Giro system to the Post Office, and to deal precisely with the delay on the part of the Postmaster General in coming to a decision on this important subject. As you will know, I have for many years been trying to elicit from a reluctant Postmaster General and from dumb Treasury Ministers some information regarding the Government's intention in this master, with the result that, almost in desperation, I am now forced to rely on a medium which is neither suitable nor adequate to deal with such a comprehensive subject.
I must protest most strongly tonight at the delay, the inactivity and dilly-dallying, and lack of frankness with this House, with Service organisations and, indeed, with the general public. I hope, despite the lateness of the hour and the limited scope of this debate, the national Press and the broadcasting authorities will evince a special interest in this matter, which in my opinion may affect millions of people, especially in the years immediately ahead. It is impossible in the fifteen minutes or so available to me now to describe the Giro system in detail or to deal precisely with the method of its operation. The purpose is to provide credit transfers which would largely do away with the need to handle money in notes or coins. It is an inexpensive and speedy facility for millions who have not yet acquired the habit of banking and may never do so. It is an ideal system for a middle range—not a high range, but a middle range—of transaction such as payment of rents, mortgages and bills of one sort or another.
The system is simple and efficient, and it is very much cheaper than the existing banking facilities. It would reduce work in many offices. It might be 166 described as the ordinary man's banking system. It would go a long way to meet the difficulties of persons who, after this month of March, 1963, may opt to have their wages paid by cheque but who have no bank account and who may be compelled in consequence to trouble their friends, tradesmen or small shopkeepers to cash cheques.
I had intended to deal with the operation and the methods, but, in view of the time factor, I shall merely refer to a few sentences in a document I have with me. It says:The method of operation of a Giro operated by post offices on the Continent and in Japan is very simple. Any person or concern can open an account by paying cash into the post office. They receive an account number which they can print on their letter headings, and can make payments to other account holders by completing payment forms which they could take to the post office or send Host free. Upon receipt of the instruction at the Central Office a transfer is effected and both parties notified by return of post. Payment forms can he retained by creditors to serve as a Cash Book. … The system has great advantages and economies for the person with an account in the Giro. But an even greater advantage is that a debtor who may not have an account can take his invoice or payment forms to any post office and pay his bill over the counter, the post office endorsing the bill as paid.The Radcliffe Committee on monetary reform, whose Report was presented in August, 1959, devoted a number of paragraphs to the Giro system. The Committee found that the system had long been in operation in most Continental countries, in Japan, and, possibly, in other countries as well. The only exceptions in Europe seemed to be the United Kingdom, Spain and Portugal; a queer trinity.
The Radcliffe Report stated that the records suggested that they were meeting a real public need and that the public had realised the value of these services. As a consequence, there had been a steady increase in the total balances held in the system.
The Radcliffe Committee seemed to have been impressed with these Giro systems, and I consider that they were inclined to the view that a Giro system operated by the Post Office, with its wide network of Crown and sub-post offices throughout the country, would be a practical proposition which would meet an ever-growing public need. After long experience in the post office personally I 167 am firmly of the opinion that on geographical considerations, hours of opening for public business and the nature of the premises, the Post Office would be a much better equipped medium to do this work than any joint stock bank for this purpose.
What has happened since then? On 30th September, 1959, the then Director-General of the Post Office informed the Post Office Departmental Whitley Council that the matter was "under close examination". He said that while it would be too early to prognosticate on what branch of the Post Office would develop the new system, he would seek to ensure that if the Giro system was introduced it would be as a Post Office service. It is almost inconceivable to believe that that item is still on the agenda of the Departmental Whitley Council today; still under "inactive" consideration.
Nearly two years later the Postmaster-General addressed a conference of one of the Post Office Unions. He said on that occasion that the question raised highly important issues of national policy and he strongly denied that he had been dragging his feet. He said that, as an individual, he was fascinated by the Giro system and felt that it was a project which the Post Office could well embark upon. We move forward to 22nd January, 1963, when I challenged the right hon. Gentleman again in the House. To my utter amazement, he told me that the Government were not yet convinced of the need for the Giro system and that it would not be wise to duplicate systems of this kind.
Therefore, after four years, after receiving all the reports and all the information, after all the surveys and inquiries, we are back where we started. I cannot see how I can conceivably charge the Postmaster-General with having acted with the rash impetuosity of the Gadarene swine. Whilst the right hon. Gentleman has been somnolent and inanimate on these matters, other bodies have seen the possibilities, especially with the operation of payment of wages by cheque as from this month and the partial repeal of the Truck Acts. In the latter part of 1961, half-page advertisements by the joint stock banks appeared in all London and provincial newspapers, advertising a new credit transfer system 168 which had become available to all and sundry. The trustees savings banks have joined in these activities and have now been allowed statutorily to issue cheques.
We now, therefore, have the crazy situation of the Post Office facing the loss of its existing money order, postal order, and savings bank work and being deliberately prevented by the Postmaster-General from seeking new work to replace it. It is indeed strange that under the direction of a Postmaster-General, who a year ago boasted in the House that his new concept was of a Post Office which would have drive and initiative and would have more freedom to act on so-called speedy commercial lines, to find that same Postmaster-General saying in the House in January, 1963, that he yet has not made up his mind. As far as I can see, that means in effect that he is not proposing to introduce the Giro system.
I maintain that by any commercial criteria there is need for a Giro system in this country. I maintain that by common consent the Post Office is the most suitable medium to operate it. The staff and all the organisations which represent them are, as far as I know—and I think that I am well informed on this —fully in favour of the introduction of the system. The administration itself has been sympathetic all the way through and, as I have said, the Postmaster-General was fascinated by it. The Financial Times has been giving it its backing and many hon. Members in all parts of the House have openly declared that they are in favour of it.
Why, therefore, the delay and the indecision? I can only reach one conclusion, and that conclusion is shared by the Post Office Departmental Whitley Council. It is shared by a large number of people among the general public who have been in correspondence with me on the subject. All those who have written to me feel that the Government are failing in their duty to the public, and especially to investors of small amounts of money, by their failure to introduce this system. Why are they not doing it? In our opinion, the big banking interests want the business themselves. They think that it will be very profitable. They think that there will be a lot of it. Although they know very well that they are not adequately 169 equipped to undertake the responsibility, they have pressed their view upon the Government and upon the Postmaster-General. Political dogma and ideology have prevailed over wise judgment and expert knowledge in this matter. The administration and the Post Office staff are being sacrificed. Millions of people will be denied a useful and cheap service.
I was hoping sincerely that the right hon. Gentleman himself would be here to reply. I had hoped that he would say something of substance tonight, even if it were only "Goodbye".
§ 10.15 p.m.
§ Mr. Jeremy Thorpe (Devon, North)
First, I congratulate the hon. Member for Totnes (Mr. Mawby) on his appointment as Assistant Postmaster-General and I wish him well in his job. I congratulate him, also, on the alacrity with which he has made his way to the Dispatch Box, and, speaking as one Devon Member to another, I hope that he will bend over backwards and exercise all possible prejudice in favour of the County of Devon and the improvement of postal services, television and radio communications there.
I support the hon. Member for Manchester, Openshaw (Mr. W. R. Williams). I have myself put various Questions to the Postmaster-General about the introduction of the Giro system. The Financial Times on 18th August last year said that there ishardly an advanced country where the official money transmission service is as cumbersome and expensive as in Britain.I believe that it is right to say that, whether one uses the system of the registered postal packet, the postal order or the money order, it costs very nearly 1s. 3d. for every £10 in transmission. There are virtually no countries on the Continent of Europe which have not evolved a Giro system of some sort.
I put to the Assistant Postmaster-General a few short submissions in support of the argument that this would be an invaluable introduction. The hours at which post offices are open are, obviously, for the general convenience of the public; they are far more extensive than banking hours. It would, therefore, be convenient for members of the public if they were able to pay various bills through the post offices to the 170 various companies which had a Giro account.
Second, it would allow the 23,000 sub-postmasters and the 2,000 ordinary post offices to provide an improved service to the public which, also, would be of economic advantage to the Post Office.
Third, it would help to reduce crime because, with such a system introduced, there would inevitably be smaller amounts of money moving about the country because people would adopt the new method.
Finally, I believe that it would save the work of the post office officials themselves. It would save a tremendous amount of labour on postal order and other payments out which they have to make under the present system, and it would be good financial business for the Post Office itself.
I mention, in particular, the benefit to people living in rural areas. It is very difficult for people living in villages to have to go into the towns to pay their gas bills, their electricity bills and so forth. The difficulty is aggravated as communications in the rural areas become worse, as branch railway lines are closed, and so on. Here is an invaluable service which the local village post office could provide.
I can only agree with the hon. Member for Openshaw in suspecting that there has been pressure on the Government from the banks which feel that the financial interests would be adversely affected. I hope that the Government will resist this pressure and enable the Post Office to increase its business by providing this service which would not only be of advantage to the Department but would be of advantage to the public at large.
§ 10.19 p.m.
§ The Assistant Postmaster-General (Mr. Ray Mawby)
I hope that the House will recognise my limitations on my first day of taking office as Assistant Postmaster-General.
As he usually does, the hon. Member for Manchester, Openshaw (Mr. W. R. Williams) put his case fairly and with the experience which we all know he has of the Post Office. The fact that my right hon. Friend is not replying to this debate is, of course, no reflection upon the hon. Gentleman. It is simply that it 171 is fairly standard practice that the junior Minister replies to Adjournment debates.
First, I wish to make it clear that the suggestion of the Radcliffe Committee, to which the hon. Gentleman referred, was not that the Post Office should proceed to establish a Giro system. What it in fact recommended in its Report was that a Post Office Giro should be investigated in the absence of an early move on the part of the existing institutions to provide a simple system for the transfer of payments. Since that time, the joint stock banks have, of course, developed their transfer business, and the hon. Gentleman referred to the advertisements and moves that have been made in the transfer business, including the introduction of the credit transfer system. I have no doubt that it is their intention to consider the further development of the system.
I agree that the Post Office, with its many thousands of offices throughout the country and its long hours of opening for the public, may be thought to afford the public more convenient facilities, and I want to say straight away that we in the Post Office have given a great deal of thought to this question and in particular have tried to decide whether it would be good business for the Post Office. It would be very foolish to dogmatise and to say that a Post Office Giro would or would not pay, because one has to admit that the majority of the population do not understand what a Giro system is, still less whether they would patronise it in the event of it being established.
§ Mr. Williams
If that is so, how does the hon. Gentleman explain why the banks are so anxious to get it?
§ Mr. Mawby
If I can refer back to the recommendation made by the Radcliffe Committee I think that that will explain, because there is already an established system. Perhaps I can deal with that point later.
There are large differences between British financial institutions and those which exist in those continental countries where the Post Office operates a Giro. To begin with, none of the countries operating a Giro on the other side of the Channel has banking facilities at all comparable with the British clearing bank 172 system, supplemented as it is by postal orders for small remittances. Where continental Giros are successful—and not all of them are; for example, to the best of our knowledge, neither the French nor the German system pays—their success arises from the fact that they are widely used as the system for transfer payments of large Government and commercial moneys. Most of their income, of course, comes from the investment of the balances of the larger accounts which they handle.
The second thing which I should like to emphasise is that the existing patronage of the British banking system is probably greater than that of any continental Giro. In France, where the penetration of the Giro system is greatest, it amounts to about 10 per cent. of the population whereas in the United Kingdom 15 per cent. of the population already have accounts with clearing banks. It is also important to note that some continental Giros have been in existence for forty years and yet have not established as high a proportion of the population using them as the number in this country using the ordinary services already provided by clearing banks.
Moreover, my information is that the number of wage earners who hold Giro accounts on the continent are relatively few, even though many are paid on a fortnightly basis, which would be an additional incentive to use the Giro system. In those circumstances, therefore, it is difficult to see how the hon. Gentleman can suggest that this is an ordinary man's system. It could be in this country, perhaps, but it has been established, as I have said, that very few wage-earners abroad take advantage of Giro accounts.
I confess that I thought at one time that a British Giro would make a wide appeal to the weekly wage-earners here. I still do not rule out that possibility, although the unenthusiastic response to the payment of wages by credit transfer or cheque—and I admit that it is early days—is hardly an encouraging sign.
I turn to what a Post Office Giro here would involve. As I have tried to indicate, it would be by its nature speculative. Our studies suggest that it would take at least four years to set it up. It would have to be a completely new organisation, and all our studies show 173 clearly that it could not be grafted on to the existing Savings Bank. It would require capital investment of £4 million at least. If one were to be set up, it would, as the hon. Member said, probably give a 24-hour service, so that transfer instructions posted today would be debited and credited to the respective accounts on the following day. We should try as far as possible to avoid charging fees on orders for transfers from one account to another and we should have to look to our interest earnings on the balances in the Giro to finance this main activity. Cash transactions, on the other hand, might incur fees of up to one shilling.
If a Giro were successful, it would inevitably eat into the conventional remittance services of the Post Office and also the mails, because people would not have to post as many documents. The hon. Member made the point, but it is debatable, whether, because it might lose on these services, the Post Office ought to cover itself by adopting the Giro system. We estimate that it might reduce existing Post Office profits by at least £2 million net.
Looking at the proposal as a whole, our estimate is that a Giro which handled 1 million accounts would need the backing of balances totalling about £200 million, averaging about £200 per account. 174 If we got up to 5 million accounts, the average amount required per account would be about half as much. I doubt whether we could look for continuously maintained balances of this size from ordinary working people, and my view is that we should require a pretty massive transfer of business by Government and commerce from the banks to the Giro in order to fill the card.
Could this be done? A Giro would have the advantage of speed of transaction, longer opening hours and, very likely, cheapness. Even so, I regard it as doubtful whether these advantages would suffice to attract enough balances, especially when we should be in competition with the clearing banks.
Finally, I think it is fair to say that two independent systems of transfer would probably prove less convenient than one and more expensive than one in the long run, and the present view of the Government is that the Post Office ought not to launch into what might easily be a losing venture until it is far clearer than it is now that the Clearing Bank system is incapable of developing so as to meet all the country's needs.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-eight minutes past Ten o'clock.