Postal Services in Scotland after 2014
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Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
After 2014, there are two alternative futures. There is the possibility of separation or of Scotland remaining within the United Kingdom. The debate must take into account which is more likely. I looked this morning at the William Hill website, and I see that it is 9:1 on that there will be a no vote in the referendum. Bookies are not in the business of losing money, so I think it is safe to assume that the bookies have got it right. Therefore the question of separation is now largely hypothetical.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I congratulate my hon. Friend on obtaining the debate in such a timely fashion, given the pretty dreadful announcements that we expect later this afternoon in the House. Does he agree that in this situation competitors should operate on a level playing field, and that the private sector should not be allowed to cherry-pick some of our greatest national assets?
Mr Davidson
Indeed. I intend to come on to that, but I want to make the initial point that now, as distinct from when I first applied for the debate, the question of separation is largely hypothetical. Therefore we need to discuss the future of postal services in Scotland in the context of remaining in the United Kingdom. Many of us who have been involved in previous elections have seen, either from our own party or the one that is now in government, a decapitation strategy, but I never expected to see the yes campaign operating a self-decapitation strategy, ejecting members of its leadership, as it is doing. It is now pretty clear that the yes campaign is no more than a sham. Essentially it is an SNP campaign for separation.
I want to turn to the question of the future of Royal Mail within the Union and under the present Government. I never thought that I would see a Liberal Secretary of State proposing privatisation of the Post Office, and a Liberal Minister supporting it in a Westminster Hall debate. Who—among those of us who can remember how Liberals previously campaigned for this post office to remain open, or in defence of that aspect of Royal Mail, always blaming someone else—would have thought that they would be the drivers of the privatisation of Royal Mail? A Liberal Secretary of State will this afternoon call for its privatisation. What a turn-up for the books. Well, well.
We must be clear about the Royal Mail’s position. It is clearly not a company in crisis. It has been suggested that it faces imminent danger, and that privatisation is the only answer. That is simply not correct. Its profits more than doubled in the past year, to £403 million from £152 million in 2012. Revenues grew by 5%. The Government, correctly, have taken over the assets and liabilities of the Royal Mail pension scheme, which saves the company £300 million a year. Parcel volumes are growing. Royal Mail, admittedly, used to be a letters company with a parcels business attached. Now it is the converse: essentially a parcels company with a letters business attached. Therefore, adjustments are obviously required. However, it is adjusting. Its business is expanding and it is doing exceptionally well.
Why, then, is there a drive by the Government for privatisation, fronted by the Liberals? Is it because, as has been argued, Royal Mail can have access to money only if it is in the private sector? That is clearly not correct. Network Rail, for example, which is essentially in the public sector, has access to private sector money and borrowing. When Moses came down from the mountain with the ten commandments, he did not also have the Treasury rules on a block of stone. Those rules were drawn up by the Treasury and can be changed by the Government. The Government—and particularly the Liberals, which I find particularly appalling—choose to argue that Royal Mail needs private capital and that the only way it can be brought into the business is through privatisation.
The Labour party is opposed to privatising Royal Mail. We want to clarify why the Government are in such a rush and are pressing forward with the proposal now. Is it simply because of the deficit in the Government finances, and because they want a large influx of money to pay for bankers’ bonuses? Should Royal Mail be privatised to pay for bankers’ bonuses? That is one of the questions to which we need an answer from the Government. There are credible alternatives to privatisation. There is no crisis to solve, and therefore it is inexplicable—other than that it is ideologically-driven—that the Government should be putting the proposal forward.
The obvious anxiety is that the universal service will come under pressure with privatisation. The point of introducing private sector finance will be to allow those in the private sector who buy shares to make a profit. They will obviously seek to enhance that profit by driving down costs, and one of the best ways for them to do that will be through the universal service obligation.
The Government have shown that they are willing to undermine Royal Mail at every opportunity by, as my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) said, allowing other people to cherry-pick the best fruits—the busiest areas—and drain funds from Royal Mail, so that it will not be able to cross-subsidise as an overall national service would. [Interruption.] We cannot have faith in a system of regulation. We have seen, for example, that the power company regulators have been impotent—[Interruption.] One of the Scottish National party Members keeps chuntering away. Would the hon. Member for Perth and North Perthshire (Pete Wishart) like to intervene, or does he just want to chunter?
Mr Jim Hood (in the Chair)
Order. The hon. Member for Perth and North Perthshire cannot have a chat across the Chamber. If he wants to intervene he should do so, but he should not comment while a Member is on his feet speaking.
Mr Davidson
Thank you, Mr Hood. It is interesting that SNP Members choose not to intervene, but just to chunter from a sedentary position.
The Government claim that the universal service is enshrined in law, but I understand that that covers only the bare minimum, and we are of course aware that the Government cannot bind their successor. It cannot be guaranteed that future Governments will abide by pledges that are given now.
John Robertson (Glasgow North West) (Lab)
We have seen the Government’s bully boy tactics over imposing privatisation, and, once again, in the chuntering and shouting from the side, we have seen the SNP’s bullying. Is it time that we all stood up for what is right—for the workers and the people who use Royal Mail every day?
Mr Davidson
Of course we should stand together. Those of us who oppose the privatisation of Royal Mail should make our opposition clear and vote together against what is being put forward, to my astonishment, by the Liberals. We would normally expect an alliance in Scotland between the Labour party, the nationalists, the Greens and the Liberals against a Conservative Government who are proposing privatisation, but we are not in that position.
Mr Mike Weir (Angus) (SNP)
The hon. Gentleman makes an interesting case, but he must know that the SNP has stood against, and continues to stand against, the privatisation of Royal Mail, whether it comes before or after independence.
Mr Davidson
Yes, I am aware of that. That is why I am saying that I can see no reason why the hon. Gentleman’s party, the Labour party and indeed the Greens, who I understand also oppose privatisation, should not be campaigning jointly against the forces of darkness, as represented undoubtedly by the Conservatives. What surprises me is the way in which the Liberals seem to be aligning themselves with the forces of darkness on privatising the Post Office. A year ago, two years ago or three, four, five years ago, who would have expected that the Liberals would be the people proposing the privatisation of the Post Office in the House this afternoon? That is a disgrace. [Interruption.] If my chuntering friends from the SNP are willing to campaign with us, we will campaign across Scotland.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
Will the hon. Gentleman give way?
Jo Swinson
It may be helpful if I correct the record. The hon. Gentleman just mentioned the privatisation of the Post Office, but it is important to be clear that this is not about the privatisation of the Post Office. Royal Mail is up for privatisation; the Post Office is absolutely not.
Mr Davidson
I thank the Minister for that clarification. I am sorry, but like many of us, I remember the days when Royal Mail and the Post Office were part of the same organisation. I sometimes have a tendency to use the names interchangeably. I excuse her from any suggestion that she is in favour of privatising the Post Office. However, she does stand charged of wanting to privatise Royal Mail. If she wants to correct that, I would be more than happy to give way to her again. [Interruption.] All right, there is silence.
Mr Weir
I thank the hon. Gentleman for giving way once again. I remind him that we opposed privatisation when Labour tried to privatise Royal Mail, and we continue to oppose it now. In fact, I attended the Backbench Business Committee yesterday with his colleague, the hon. Member for North Ayrshire and Arran (Katy Clark), to ensure that we get a debate on privatisation as soon as we come back after the summer recess, before this pernicious Bill goes through.
Mr Davidson
I am not suggesting, nor have I suggested at any point, that the SNP supports privatisation. Despite our disagreement on those issues on which the SNP is wrong, we can work together to oppose the privatisation of the Post Office. I see no difficulty on that whatsoever. It is entirely possible to find ourselves in strong disagreement with people on some issues yet work together with them on others. I extend the clenched fist of friendship—[Laughter.] I extend the hand of friendship so that we are able to work together against the Liberal proposal to privatise the Post Office.
Anas Sarwar (Glasgow Central) (Lab)
I congratulate my hon. Friend on securing this debate. I am sorry to break the hand of friendship that he has offered to SNP colleagues, but does he not agree that actions speak louder than words? In 2009-10, the Scottish Government awarded £220,000 of contracts to DHL, which delivered 6,162 pieces of literature. FedEx was awarded £49,514 of contracts in 2010-11, and an £8 million contract has just been awarded to TNT, instead of Royal Mail. Does that not demonstrate the Scottish Government’s commitment to Royal Mail and its workers?
Mr Davidson
Goodness me! That is a surprise. I look forward to hearing from SNP Members, who are campaigning very strongly with us to oppose the privatisation of Royal Mail, as to why the Scottish Government, which they control, have been giving such contracts to the private sector. Goodness me, there must be some mistake, surely. [Interruption.] Are we going to get a correction? No, we are not. I can remember elections in which certain people sent mail through private companies, but those were just mistakes. Such things happen.
Let us be clear that a privately owned Royal Mail will undoubtedly apply downward pressure on the universal service obligation. We have seen that happen in Holland, for example, where the privately owned universal service is now likely to be reduced from six days a week to five days a week, with services being dropped on Mondays. We must recognise the alternative that lies in the private sector by looking at what private sector operators undertake at the moment. TNT, for example, operates on a principle of zero-hours contracts, whereby people who deliver for TNT are employed for zero hours. TNT constantly invites more people to the workplace than it needs on any given day so that it can guarantee itself enough numbers. That means, of course, as we used to see in the docks when they had the casual labour scheme, people are being turned away, potentially day after day, by privatisers who are treating workers simply as commodities, leaving those workers with zero hours on many occasions, which means they are unable to feed their family during the week. We can have little faith in the system of regulation, because nobody who understands the way in which the privatised industries have been operating has any confidence in the way in which they have been controlling those companies to date.
Finally—as you have previously indicated to me, Mr Hood, when a Member of Parliament says “finally” it usually means that he or she is about 40% of the way through their speech but simply wants to give their audience hope—I will address the question of the alternative future. As I indicated earlier, William Hill has odds of 9:1 on on there not being a no vote—sorry, I mean on there being a no vote. That is a bit like the confusion of Royal Mail and the Post Office.
The alternative future of separation calls into question the future of postal services in Scotland, and I understand that the SNP—rather than the yes campaign, because it has been marginalised, as we all know—has indicated that it intends to ensure a universal service obligation. My understanding is that the SNP has also indicated that there would be one price throughout Scotland, but it has not specified whether that one price would be the same price that applies in the rest of the United Kingdom, and I think it would be helpful if the SNP did specify that at some point. As we approach the referendum, there is an obligation for the SNP to clarify how it intends to fill the gap in financing Royal Mail in Scotland after separation, because that gap is presently filled by cross-subsidy from the rest of the United Kingdom. Operating a national service clearly involves cross-subsidy for rural areas, of which Scotland has a disproportionate number.
Lindsay Roy (Glenrothes) (Lab)
Is not Royal Mail an excellent example of the dividends of sharing and pooling resources to promote fairness within a strong UK?
Mr Davidson
Absolutely. Royal Mail provides a service, particularly throughout the highlands and islands and the most scattered rural communities in Scotland, in a way that the private sector does not. It is noticeable that when the Select Committee on Scottish Affairs investigated the provision of postal services to rural communities, which was quite some time ago—when the SNP was still on the Committee, before it took the huff and walked off—it was clear that the private sector was not delivering to those rural communities; it was refusing to deliver to a variety of postcodes where the costs were much higher than elsewhere. Royal Mail was the only one that would deliver to those communities at the standard and universal price, and it is the cross-subsidy system that makes that viable.
Those who would break Scotland away from the rest of the United Kingdom have an obligation, as we approach the referendum, to spell out exactly how much they anticipate would be required from Scottish taxpayers to meet the costs of the universal service obligation. They cannot say that they want European or continental standards of service while at the same time being unwilling to pay for them because they want to reduce taxation levels, particularly on business. That simply does not add up. People in Scotland deserve to know the truth.
I can remember when the arc of prosperity was being floated a while ago. That was in the days when the SNP was actually against being in NATO. But we have had two changes since then, if I remember correctly: the first was that membership would be automatic, and now Keith Brown has conceded that it would not be automatic. Things change.
None the less, the Scandinavians were held out as an example to Scotland. Are hon. Members aware that in Norway, a first-class stamp costs the equivalent of 103.9p? That is the Scandinavian model. Is that what Scotland will have after separation? I think that we deserve to be told. What will the price of first-class stamps be in a separate Scotland? Will posting mail to other parts of the United Kingdom cost the same as at the moment? It is far more expensive to post mail from Northern Ireland to the Irish Republic than to other parts of the United Kingdom. In those circumstances, the Irish Republic is a foreign country, as Scotland will be to the rest of the United Kingdom.
Mr Davidson
That is a choice that the Irish made, but the cost of sending mail from Northern Ireland to the Republic is different. There is no guarantee at the moment about what will happen. Are SNP Members saying that they will guarantee that the cost of sending mail from any part of Scotland to any part of the United Kingdom after separation will be the same as sending it within the United Kingdom? If so, that must be costed. We cannot have people simply plucking uncosted promises out of the air.
Mr Tom Clarke
My hon. Friend is making such a good speech that I hesitate to intervene. Will he address the issue of independence from the point of view of the workers from the Communication Workers Union who came to see us last week? Will he bear in mind the jobs, the pensions and the individual rights of such workers? What assurance do we have that those will not change if privatisation goes through?
Mr Davidson
I am grateful for that point, because it was my final final point. Those of us who support Royal Mail remaining within the public sector—again, I extend the fist of friendship to my colleagues in the SNP; we should be campaigning together on this issue, on which we agree—need clarification from the Liberals about what the future holds for those whose services will be privatised and those who work to deliver those services.
Many postal workers have spent a lifetime in devoted service to Royal Mail. Many have worked above and beyond the call of duty. Many postmen and women in rural areas provide an essential lifeline to local communities, doing things far beyond the normal routine that we might expect in cities. What future do they have? Will this Government guarantee that there will be no deterioration in terms and conditions? Do they expect that private employers will be allowed to drive down wages and conditions as TNT has done? Why are they prepared to accept TNT handling this country’s mail at the moment on zero-hours contracts? We need answers to all those questions.
Pete Wishart (Perth and North Perthshire) (SNP)
I am enjoying the hon. Gentleman’s speech immensely. I am having great fun, and I thank him for securing this important debate. He challenged the Scottish National party about what we would do post-2014. He has challenged the Liberals and the Government about what they would do post-2014. What would the Labour party do? The Government are going to privatise today. Would the Labour party put Royal Mail back into the public sector? We need certainty.
Mr Davidson
At the moment, there is no certainty. As with a number of things, I anticipate that the Labour party will work up a manifesto for the next election. We will try to ensure that we have identified our priorities, and we will put those clearly before the people. In the meantime, we will do everything that we can to ensure that the change does not go through.
Mr Davidson
Well, that is an interesting point. Of course we do not know at the moment where we will be in 2014. We are putting all our efforts into ensuring that privatisation does not take place, so we are focusing on that. It is a bit like the question of the bedroom tax. Nationalists are calling on Labour to clarify whether we will reject it in 2015, when at the moment, the SNP could be doing something about it in Scotland by helping local authorities but declines to do so. It could pay the costs of the bedroom tax to local authorities and social landlords now, but it refuses.
That is the difference between us. At the moment, we are relatively impotent, regrettably, because we are not in power here or in Holyrood. The power lies, in this case, with the Conservatives and their front men and women, the Liberal Democrats. Did I mention that it is surprising to me that the Liberal Democrats are fronting the privatisation of Royal Mail? What a scandal that is. People ought to be aware of it—[Interruption.] There is no point in the Minister shaking her head. She is letting her tresses flow back and forth; I wish I could do that. None the less, it is a fact that the Liberals are selling off the Post Office—[Interruption.] Royal Mail; I apologise. We are opposed to that.
Mr Hood, I know that a large number of other Members want to speak, so finally—finally, finally—I thank you for your chairmanship of the debate so far.
Mr Jim Hood (in the Chair)
I have four speakers on my list, plus the two Front-Bench Members. I ask Members on my list to be considerate of others, so that everyone has time to speak.
Mr Iain McKenzie (Inverclyde) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hood. I congratulate my hon. Friend the Member for Glasgow South West (Mr Davidson) on securing this important debate.
The twin worries for Royal Mail in Scotland are privatisation and separation; both are equally worrying for a high-quality service that we have come to love and expect. As I am sure we are all aware, a number of questions have been raised on a variety of subjects regarding Scottish independence from the United Kingdom, ranging from EU membership, NATO, currency, passports and many other universal British institutions. The list is extensive. We ask such questions to scrutinise the plans of those who would break up the UK and challenge their scaremongering. Today, we add Royal Mail to the list of questions about what will happen. Royal Mail is an institution residing firmly in that list. We should be told how well that important service would function if it were retained in an independent Scotland.
Currently, Royal Mail has 11,500 branches across the UK and employs thousands of people throughout Scotland. It is a crucial service, ensuring that UK businesses and the economy run smoothly. For example, Royal Mail estimates that it can deliver an average of 84 million items of mail every working day. There is no disguising the scale, the efficiency and, ultimately, the importance of that institution across the United Kingdom. Royal Mail serves not only big cities but the far-flung areas of our country. The price of a stamp guarantees delivery, regardless of difficulties encountered from dispatch to destination.
To give a bit of history, it all started way back in 1635 when Charles I made the postal service available to the public, with the cost of postage being paid by the recipient; I hope that that does not give the Government any idea. However, it took a further century before the uniformed postie was seen on the streets, delivering door to door—something that we have become accustomed to and expect from our postal service.
Upon the Union of the Crowns, one of the King’s first acts in London, where he had decided to move to and set up home, was to establish the royal postal service between London and Edinburgh. At last, Scotland was part of a regulated postal service and, as time passed, Scotland grew in confidence, prosperity and assurance of a reliable communications service throughout the UK. Eventually, all across Scotland, we have come to use and rely on Royal Mail.
The service has grown and changed over the centuries. Royal Mail is now an integral part of business and private life; we simply could not imagine life without it. I am of an age to remember the GPO—the General Post Office—an organisation inclusive of Royal Mail and British Telecom. British Telecom was part of the ’80s privatisation drive, which is being pioneered again, but even the late Mrs Thatcher considered Royal Mail worth keeping.
The universal nature of delivery means that small businesses can rely on Royal Mail and have confidence in the quality of service and delivery, regardless of where they reside on the UK map. We must debate what the Royal Mail would look like if Scotland separated from the rest of the United Kingdom. The questions that need to be encompassed include whether there will be continuity of employment in the mail service and whether the number of depots and jobs all remain in Scotland post-independence—or might we see job losses?
Pete Wishart
Was the hon. Gentleman not paying attention to the news this morning? The Government are going to privatise Royal Mail. What would he prefer—the Tories and the Liberals, with their privatised Royal Mail, or us, the people of Scotland, running the postal service to our requirements?
Mr McKenzie
Labour is the only party to defend the universal service obligation. The debate is about what a postal service in Scotland would look like post-2014. The two challenges to Royal Mail are not only privatisation, as I have rightly pointed out, but separation.
In my constituency, the sorting office at Knowe road employs about 150 people working full time, with some part time. Working in teams, they deliver throughout my constituency, which is diverse, with some rural and mostly urban communities. Daily, the Inverclyde office receives mail by road from Glasgow, where the large city sorting depot employs many hundreds of people more, directing the mail across the country, and that is replicated in all Scottish cities.
Individually, our engagement each day remains with the postie. Well known to the community, posties deliver to our doors in all weathers, six days a week, and that brings me to the quality of service and the delivery six days a week. Under privatisation and, as well, an independent Scotland, would we be guaranteed a six-day service? Could it be maintained? After all, we have come to expect our Saturday mail delivery; if ended, what would be the impact on business?
The price of a stamp has already been discussed by my hon. Friend the Member for Glasgow South West. What price for first and second-class stamps? Would there be a first and second-class service in a separate Scotland? Would sending a letter or document to the rest of the UK be classed as overseas mail? If so, how much would that cost? Those are all questions that we need answered. Furthermore, how would that affect Scotland’s businesses? Has all that been taken into account?
What of our postcodes in an independent Scotland? Postcodes are used to identify our homes throughout the UK quickly. Would they be retained in their present form or, as we have already heard about in Ireland upon separation in 1917, would the postcodes be changed? What would our postcodes look like?
There is a risk that a new mail service would not be anywhere near the size, scale and complexity of Royal Mail at present. Royal Mail is clearly vital for business, the economy and our everyday life. Much as we need electronic mail to speed and support business, we still require the physical mail. The rise of the e-mail and its challenge to the physical letter is now being outweighed by the rise of online shopping and the resultant increase in parcel delivery. Will Scottish online shoppers be penalised? Independence will mean being outside the UK, so will the cost to deliver increase?
Surely, before the Scottish people vote on the most important constitutional decision in their history, such questions need to be answered, and as soon as possible. Who knows, but, bizarrely, the ever-increasing popularity of the postal vote could contribute to keeping the UK together and Royal Mail in Scotland?
This morning, we have highlighted yet another concern for Scottish people—the impending referendum in 2014 and the future of Royal Mail beyond 2014. From applying a stamp to a letter to recognising the postie coming down our street in distinctive uniforms and vans, we have become accustomed to and reliant on the Royal Mail service as part and parcel of being in the UK. After all, one of the first acts of the Scottish King on coming to London to unite the Crowns was that he sent the royal mail north. Like many Scots, he recognised a good thing when he saw one; we still recognise Royal Mail as a good thing, and we want to keep it.
Disruption to Royal Mail services across the UK will impact not only on the Scots, but on the rest of the UK. We must hear how the SNP intends to sign, seal and deliver a mail service in an independent Scotland.
Mr Jim Hood (in the Chair)
So that I can get in all the speakers on my list, I am imposing an 11-minute limit on the next contributions.
Mr Mike Weir (Angus) (SNP)
I am pleased to appear under your chairmanship this morning, Mr Hood. I congratulate the hon. Member for Glasgow South West (Mr Davidson) on securing the debate. He made a speech that, by his standards, was encompassing; I could agree with most of what he said until, tragically, he veered off towards the end.
According to Project Fear in Scotland, we might imagine that from the day after independence, Postman Pat will be leading a convoy of little red vans, making a break for the border. That is utterly ludicrous. The assets of the mail service—the pillar boxes, the sorting offices and equipment, the vehicles and, above all, the hard-working and magnificent staff of Royal Mail—will still be in place and will continue, whatever the ownership structure.
The first point to make is that none of us can know for certain what Royal Mail will look like either in 2014 or on independence day in 2016. It is being privatised by the Government; the Scottish National party will fight privatisation, as we have always fought it, even when the Labour party proposed it. If we are unsuccessful, however, we will have to deal with the position that we find on independence. The only protection that the consumer will have, if the privatisation goes ahead, is from the regulator, Ofcom, which should not give any of us comfort.
The hon. Member for Glasgow South West discussed the universal service obligation, and I share his concern. Under the Postal Services Act 2011, Royal Mail is obliged to continue a universal service and is the only one to fund it. The Communication Workers Union has already expressed concerns that Ofcom is allowing trials of end-to-end deliveries from other operators, which will inevitably lead to the cherry-picking of profitable routes in urban areas and the inevitable pressures that that will put on rural and less affluent areas. That is a problem not only for Scotland, but for all areas of the United Kingdom.
What protection does the consumer have for the universal service obligation? Last year, Ofcom decided that price caps should be removed from all Royal Mail products apart from second-class mail. As a result, the only truly universal service is second-class mail. First-class mail could be priced out of the reach of many people, and already our stamp price is one of the highest in Europe. Just how many people and, crucially, small businesses will send mail first class?
None of that is the result of Scottish independence—that is happening now, under the United Kingdom Government and as part of the United Kingdom postal service, even before it is flogged off to a private operator. The Scottish Government have given a clear commitment that, with independence, Scotland will at the very least match the current terms of the universal service obligation.
Anas Sarwar
Will the hon. Gentleman guarantee that the Scottish Government’s White Paper will set out in detail how postal services would operate in an independent Scotland? Will a full costing be attached?
Mr Weir
The Scottish Government will set out their plans. The hon. Gentleman asks us to do that, even though his party is trying to form a Government in 2015 and yet will not tell us what Labour will do with the postal service, because the manifesto is still being written.
We are told that the highlands and islands could get higher charges. Have Members who say that read the Postal Services Act 2011, because that is already possible under the present system? Indeed, Royal Mail has already tried to introduce zonal pricing in some areas. Nothing prevents Royal Mail or its new private owners from introducing zonal pricing in any service, other than the universal service, which, as I have already explained, could be nothing more than the second-class service.
I took the matter up with Ofcom, which wrote to confirm to me:
“Ofcom does not have any powers to restrict Royal Mail from introducing this pricing variation related to user location, as the Postal Services Act 2011 limits our regulatory powers to universal services and access”.
That comes from the horse’s mouth. Members might think that I am the only one to think this, but the Communication Workers Union made exactly the same point.
Section 43 of the 2011 Act allows Ofcom to review the USO and to recommend, among other things, a review of the minimum requirements. It could reduce what is covered by the USO. That is not the future that we want in Scotland. Royal Mail should be a public service, and if it has not been fully privatised before independence, we will stop the process in Scotland. We have never accepted the mantra of successive Labour and Tory Governments that Royal Mail must be looked at as merely another business. It is an integral part of the country’s infrastructure and will be treated as such in an independent Scotland. Indeed, the postal operator must be recognised as an economic driver, especially in rural areas, and not as a drain on the economy in competition for the resources needed for schools and hospitals, which is how it is so often portrayed by the present UK Government.
An old claim is that somehow postal charges between Scotland and England will increase, but Members should be aware that postal charges are co-ordinated through the Universal Postal Union. Letters and packages that start with one designated postal operator can be passed to other postal operators in other countries, and they take responsibility for forwarding them. Under the universal postal convention, there is an obligation on each country to ensure that such items are quickly delivered on the same terms and conditions as its internal mail.
There is absolutely no reason why costs should increase in Scotland. The Scottish postal service will decide the cost of postage in Scotland and to other destinations. In Ireland, the Republic has an all-Ireland price, and there is no reason why something similar cannot operate in Scotland. It would become a member of the UPU, as have other countries that have gained independence.
Lindsay Roy
Will the hon. Member explain why the Scottish Government make extensive use of TNT’s services?
Mr Weir
The previous Labour Government used TNT extensively because procurement rules force many Governments and public organisations to use such services. I have already said that Labour tried to privatise the industry, but Labour Members seem to forget that. The previous Labour Government tried to privatise postal services; we opposed that; and we continue to oppose it. We will ensure that the Scottish postal service meets the needs of Scotland and the Scottish people.
Ian Murray (Edinburgh South) (Lab)
I do not normally intervene from the Front Bench, but for clarity I want to put on the record the fact that the previous Labour Government would have kept the postal service in public hands. The public sector would have owned 60%, so it is incorrect to say that the previous Labour Government wanted to privatise Royal Mail.
Mr Weir
I am sorry that the shadow Minister does not remember his own policy. Lord Mandelson proposed privatisation of 49%, not 40%. The hon. Gentleman may believe that the situation would have stopped there, but the clear intention was to privatise. What will happen if privatisation goes ahead? In the Netherlands, where the universal service provider—[Interruption.]
Mr Jim Hood (in the Chair)
Order. The hon. Member for Edinburgh South (Ian Murray) and the hon. Member for Glasgow Central (Anas Sarwar) should remain in order while the hon. Member for Angus (Mr Weir) is on his feet.
Mr Weir
Thank you, Mr Hood.
I understand that, under the Government’s proposals, there will be an initial public offering on the stock market, but there is absolutely nothing to stop Royal Mail falling into the hands of an alternative provider such as Deutsche Post or TNT, and the history of privatisation suggests that that is likely. When the energy companies, BT and British Gas were privatised, most of the shares in the first instance went to small investors, but now the companies are owned by large institutions. It is very likely that that will happen to Royal Mail.
It is also likely that in due course a provider such as Deutsche Post or TNT will become the owner of Royal Mail. That is not to be welcomed, given the attitude of some of those companies to the universal service. The Communication Workers Union made the point that in the Netherlands, where TNT, the universal service provider, is privately owned, within a year of the mail market being fully opened to competition in April 2009, the managing director of TNT’s European mail network declared that the USO was
“a kind of Jurassic Park and we should be rid of it”.
The company plans cut down its deliveries.
Mr Davidson
Will the hon. Gentleman clarify whether a separate Scotland would intend to renationalise Royal Mail if it had by then been privatised?
Mr Weir
That is a bit rich when Labour will not tell us what it will do in 2015, but I will be clear. It is my view that we should do so, and that is one of the options that we will be looking at. We believe that it must be in the interests of the Scottish people and all areas of Scotland, and that that can be achieved only by public service. We have experience in Scotland of courier deliveries and what happens when the service is private. That is my view and that is what I shall be pressing for.
Country-to-country transfers are well understood, and Royal Mail receives 266 million letter post items and 1.7 million parcels from international origins. The system works perfectly well. In 2004, member nations of the UPU adopted a system aimed at covering their actual mail processing costs. There is absolutely no way in which a mail operator in the remaining parts of the UK could impose excessive charges on a mail operator in Scotland for mail delivered to or from Scotland or in transit to another destination, because the costs would be identical to those within its territory. Before anyone gets excited, all recently independent states had access to the UPU almost immediately on gaining independence.
The hon. Member for Inverclyde (Mr McKenzie) talked about the workers. In fact, Royal Mail employment in Scotland is below the UK average and there is scope for making a better service and creating more employment. There are also prospects for helping the Post Office, which is not being privatised but is important to rural areas. We will build a delivery service for social security and many of the things that have been taken away from post offices. We will be looking to help post offices. Although it is a reserved matter, the Scottish Government have a good track record of helping post offices with a diversification programme, rates relief and business bonuses.
My time is running out, so I will end by saying that it is true that there are real dangers for postal services in Scotland post-2014. That danger does not come from Scottish independence; it comes from remaining in the United Kingdom and seeing a postal service privatised by the present Government. I predict that in the unlikely event that the Labour party forms a Government at Westminster in 2015, it will do what it always does and decide that it cannot reverse the privatisation. Labour will just go along with what the Tories have done. There will be a privatised postal service in the UK if the Government’s proposals continue. In Scotland, there will be a postal service that works for the people of Scotland and the communities of Scotland. We will build that as part of independence.
Mr Russell Brown (Dumfries and Galloway) (Lab)
It is a pleasure, Mr Hood, to see you back in your place this morning. It is good to see you back among us. I congratulate my hon. Friend the Member for Glasgow South West (Mr Davidson) on securing this debate. As chair of the all-party group on post offices, I want to concentrate more on our post office network in Scotland, and what is going on out there.
I know that today is a big day for Royal Mail, with the statement that we will hear in the House later. However, to people right across the UK, and particularly in Scotland, the post office network is a vital part of day-to-day life, keeping in mind also that the Post Office depends heavily on generating a significant percentage of its work through Royal Mail. The Government, with a fanfare, introduced a subsidy to the network and embarked on what they have claimed is a programme of no closures, but the picture out there is somewhat different in many of our communities. I will quickly go through some figures, and towards the end, I will raise one or two issues with the Minister.
We have just over 1,400 post offices in Scotland, which has 12% of the UK’s 11,800 post offices. Some 67.6% of post offices in Scotland are rural, whereas in the UK, 54.6% are rural. Some 32.5% of urban post offices are urban deprived, compared with just under 25% in the UK, and 28% of Scottish post offices are the only retail outlet in the area. Work done by what used to be Consumer Focus—now Consumer Futures—shows that 49% of the population in Scotland visit a post office once a week, while 58% of residents in accessible rural areas do so. Scottish post offices are visited once a week by some 60% of residents in remote rural areas, 63% of people aged 65 and over, and 63% of disabled people.
The Government produced plans for safeguarding the post office network, as I said. The social and economic changes, along with a withdrawal of Government services and growing competition from alternative service providers, have put serious financial pressures on the post office network in recent years. Between 2001 and 2012—I appreciate that the bulk of that time was under a Labour Government—26% of Scottish post offices closed. The figure UK-wide was 34%. Concerns about the future viability of the post office network led to Government proposals for the modernisation of the network. Published in November 2010, those plans were designed to make the network more financially secure and to prevent further closures. We need to keep in mind that all those businesses are small businesses, and people endeavour, as best they can, to produce a livelihood from the work that they are doing.
Let me deal with sub-postmasters’ income. The net Post Office pay is used to pay for the running of the post office, including the sub-postmaster’s own drawings, staff salaries, rent or mortgage, and any other overheads. In Scotland, the average net Post Office pay was just under £2,000 a month last year, which was down from £2,377 in 2009. That is a drop of some 19%.
The post office has traditionally been the key local outlet where the public can interact with government. I know that there has been a great fanfare of more government work—that is, local government, as well as central Government—but the income from providing government services across the UK fell from £576 million in 2005 to a mere £167 million in 2010. The Scottish figures reflect that massive reduction. The Government have, I would say—I am sure that the Minister will say differently—failed to deliver on their pledge. The few new services that have been introduced are one-off transactions available only in a small number of post offices. No new major government services have been awarded to post offices since May 2010.
I will provide some additional figures, for which I want to thank the National Federation of SubPostmasters. Research has shown that the overwhelming majority of Scottish sub-postmasters are making no income at all from certain services: 92% earn nothing from ID-checking services; 71% earn nothing from the passport check-and-send service; 59% earn nothing from Driver and Vehicle Licensing Agency transactions; and 92% earn nothing from payment services. Other services, such as the benefit cheques, or “green giros”, and national savings and investment products have recently been withdrawn from post offices.
Each and every one of us in this Chamber was delighted when, in November last year, the DVLA contract was awarded, or re-awarded to the Post Office, but the picture out there is somewhat different. Sub-postmasters are seriously worried that there is a precedent of falling rates of pay for transactions directly linked to all of that, and income is undoubtedly dropping even after having been re-awarded that contract. What lies ahead, later this year, are benefits and universal credit. The system that will be introduced contains no mechanism to allow some of the poorest and most vulnerable in our society to access their money—their benefits. We all realise that we have a job of work to do, as elected representatives, to protect some of the neediest and most vulnerable people in our communities and in society in general. If that money is finding its way into a Post Office account, will there be some way to ensure that peoples’ rent, utility bills and council tax is actually paid? Nothing is in place at the moment, and we are about to embark on that system.
I will tie up my comments quickly, but I want to come back to the point that I raised with the Minister yesterday, because I am deeply concerned that we do not appear to have the full facts and figures on what is happening out there with post offices. I will repeat what I said—I know that she has promised to come back to me in writing, but she has not done so yet, unless she has done some writing overnight. Will she share with us the number of sub-post offices that are temporarily closed or have had to move to an alternative, temporary service delivery system? Communities are desperately seeking answers.
Finally, I want to say that we did have another fanfare in the past two or three years, about the delivery of credit union services through post offices. That has disappeared; no one seems to know where it is. If there is about to be an announcement on the matter, it has been a long time in the making. I recognise full well that, under the previous Government, there were two closure programmes. I say to the Minister that I supported those programmes, because they were about service delivery across communities, with people having access. What we are seeing at the moment are temporary closures, with the Post Office desperately looking to find someone else to take on a post office that is sitting vacant. However, it needs to be understood that the income of sub-postmasters and sub-postmistresses has been so badly hit over the past two or three years that there is little wonder that no one wants to take up that offer of opening a business under the terms of a post office. We may not have seen a programme of closures under the current regime, but I worry that if we have another Conservative or Conservative coalition Government in 2015—heaven forbid—we would undoubtedly see a programme of closures like we have never seen before.
John Robertson (Glasgow North West) (Lab)
It is a pleasure to speak under your chairmanship, Mr Hood, and I congratulate my neighbour across the Clyde, my hon. Friend the Member for Glasgow South West (Mr Davidson) on securing the debate.
I know what privatisation is all about. I was a member of the General Post Office. That became the Post Office, which was then split up into the Post Office and British Telecom, which I became an engineer in. Of course, the Post Office has now been split up into Royal Mail and the Post Office.
More than 250,000 people were working for BT when it was privatised in the 1980s. I am not sure of the exact figure these days, but it is around the 90,000 mark. That gives some idea of what has happened to a privatised industry over the years. Some of those job losses would have occurred anyway because of new technology, but the same cannot be said for the Post Office, and Royal Mail and post offices have, sadly, seen staff numbers go down. Many hon. Members, particularly from the separatist party, have mentioned the CWU. I was a member of the CWU. I had the honour of being a member of that union back in the days when it was the POEU, the Post Office Engineering Union, and then the NCU, the National Communications Union, and a very good union it was too. Then I became a member of Connect, which was for the management side of British Telecom, and from there I became a Member of Parliament.
What could happen to the Post Office in the years ahead I do not want to think about. My hon. Friend the Member for Glasgow South West is right to say that the Liberal Democrats have taken on the role of head executioner and are being used yet again for legislation that is not what the country would vote for if it was given a vote on this issue. The Minister is another of my constituency neighbours; her constituency is to the north of mine. I look forward to it coming back to Labour at the next election and having a Labour neighbour next time round. Her party is doing its best to ensure that she is not re-elected.
We have seen already the cherry-picking that goes on in the post office industry. That worries me a great deal. As the Post Office is sold off, we have seen what services the Scottish Government are using. My hon. Friend the Member for Glasgow Central (Anas Sarwar) mentioned this. DHL delivered 6,162 items, costing £220,047, in 2009-10 alone. FedEx—it is important that we mention all these things—delivered 1,566 items, costing £49,514. An £8 million contract was given to TNT in 2009. The Scottish Government can say that they were adhering to the rules. I do not know that that is true. I am not saying that it is not true, but I do know that they cannot spout about how much they are doing to protect post offices and post office workers and at the same time undermine their jobs.
How does that compare with the present UK Government? They want to get rid of the Post Office. Hon. Members have said that the previous Government wanted to get rid of it too, but I say to them that it was Labour Back-Bench Members who stopped that privatisation or partial privatisation. It was not Liberals. It was not the SNP. It was not Conservatives. It was Back-Bench Labour MPs such as my hon. Friend the Member for Glasgow South West, who secured this debate, who spoke the loudest to try to stop that privatisation, and they did.
Jo Swinson
I just want to bring this clarity to the debate. Yet again, the hon. Gentleman has been talking about privatisation of the Post Office; I think that he means privatisation of Royal Mail.
John Robertson
No, I was talking about privatisation of the Post Office. Let us remember that the Post Office was split into Royal Mail and the Post Office. The next step of privatisation will involve the Post Office. The hon. Lady may be confused. Then again, I could be confused—that is always possible—but I do have some questions to ask her and I would like to know whether she has asked questions of the Scottish Government about exactly where we are in relation to privatisation of the Post Office. What will happen in Scotland in the event of privatisation? What about what is happening in 2014? Have the Government taken that into consideration, albeit that the bookies are giving odds of 1:9 on separation? We hope that we will not have that, but what are the implications for the free movement of post across the border?
Has the Minister asked the Scottish Government what they would do in relation to the free movement of post that has originated from south of the border or, for that matter, from Northern Ireland? What would the impact be on Scottish businesses in those circumstances? What planning have the Scottish Government done in relation to separating Royal Mail and the post offices in the event of a 2014 win on their part?
What would the impact be on jobs? We have heard that there are 12,500 jobs in the post office industry north of the border. We heard comments on this issue from the hon. Member for Angus (Mr Weir), whom I have a lot of time for. We have been on Select Committees together, and I respect him in a lot of ways. We do not always agree with each other—that is for sure—but he is usually worth listening to, although perhaps not so much today. I am trying to find out different bits and pieces of information and I have further questions for the Minister, but I do want to congratulate the hon. Member for Angus, because it would be churlish not to, on the early-day motion that he tabled, with the support of the CWU. It got cross-party support from 71 MPs. Funnily enough, there were no Tories, but he did get some Liberals, yet it is the same Liberal party that is helping to front up this future privatisation.
Sir Malcolm Bruce (Gordon) (LD)
I do not wish to duck responsibility, but the Liberal Democrats in fact had argued even in the last Parliament that if Royal Mail was to succeed and compete, it would have to attract private investment and private capital and the best way to enable it to do that would be to privatise it, so it is not as if we are going along with a Conservative proposition; it is our policy that is being implemented by Liberal Democrat Ministers.
John Robertson
I thank the right hon. Gentleman for that intervention. When I am putting out my election leaflet in a few years’ time, that will certainly be in it. I know that the hon. Member for Angus and his colleague, the hon. Member for Perth and North Perthshire (Pete Wishart), will be doing the same, as will many other Opposition Members, so I thank the right hon. Gentleman for that clarification. It is important that we understand exactly what the position is, and I am sure that the Minister will back him up when she makes her contribution in a few minutes’ time.
Mr Davidson
Can I tell my hon. Friend that I saw a Liberal in my constituency once? We do not need to bother putting out leaflets against them there, but that was an incredible announcement from the right hon. Member for Gordon (Sir Malcolm Bruce). We are now being told that the Liberals are not simply dupes of the Conservatives in this matter; they are actually the drivers of the privatisation of Royal Mail. It is incredibly helpful to have that on the record. I am sure that they will pay a very heavy price for it at the next election.
John Robertson
I thank my hon. Friend for that intervention. He is probably right, but democracy is not always fair. It does not always work out the way we want it to. That said, it is our duty to ensure that the electorate are given all the information possible, and certainly Opposition Members will hold to account not only the Government, but the Liberals. In the last two general elections, the Liberals were second in my constituency, albeit more than 10,000 votes behind me. That said, they were still second. I would wager that they will not be second next time—we might have to give odds of 1:9 on that as well.
I say to the Minister that the rules were for guidance. I think that that will be appreciated. They were never supposed to be written on tablets of stone. They were there to guide, not to tell people what to do. Perhaps, when we are looking at the rules and things that have happened in the past and looking to the future, we can look to guidance, rather than strict rules, because one of the hardest things for any management or even any union is to be given rules that they think have to be abided by 100%, yet are used for guidance. In relation to some of the guidance, I would be inclined to ask what can be done for rural areas, the highlands and islands—generally, areas outside the city centres. I am very lucky; I live in an inner-city constituency, but I know that if Scotland were to become independent and the costs for postal services in Scotland were all to be grouped together, the people of Glasgow North West would pay an inordinate amount more than people in rural areas for service, because it will be cheaper to send stuff in my area and they will have to subsidise people outside my area. Will that be the case? Should it be the case? If not, what guidelines will the Government produce?
I will not go on, Mr Hood. I was going to mention other bits and pieces, but my colleagues have said almost everything. The only thing I want to say is that the Post Office means a hell of a lot to me. I was a GPO member and a Post Office member many years ago. I was on strike against privatisation for three weeks. I helped with picketing and making signs for picketing. It was never easy. Union members do not go on strike because they like strikes; they go on strike because they feel that they are being hard done by and they have a cause. If privatisation comes forward and all the people who want to invest in the Post Office look at what happened in the past, they will see that this is a different kind of privatisation, which may or may not make them money. If we are making money now in the Post Office, why would we get rid of it and put everything in jeopardy? Union members will feel hard done by and may take industrial action. I know that I will stand with them if they do, because they will be fighting for jobs.
Ian Murray (Edinburgh South) (Lab)
It is a great pleasure to serve again under your chairmanship, Mr Hood. I congratulate my hon. Friend the Member for Glasgow South West (Mr Davidson) on producing in his wonderful fashion 25 minutes of wonderful speech defending not only Royal Mail and the Post Office, but the Post Office and Royal Mail as well. Time is short, so I will not run through the issues with the privatisation that is happening now at UK Parliament level; there will be a statement in the House at 12.30 pm, where the Government will lay out their plans for privatisation. It is important to be crystal clear about the Opposition’s position: we are 110% against the privatisation of Royal Mail. There was a debate in the House last week, so I will not run through the reasons for that position.
I am absolutely delighted that Liberal Democrats have said on the record this morning in this Chamber that privatising Royal Mail is Liberal Democrat policy, not only Conservative party policy. The Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon) wrote a letter in 2009 to the Communication Workers Union, saying that he was against privatisation, so perhaps only Liberal Democrats are for it and the Conservative party is against it.
Now that the Edinburgh agreement has been signed and the referendum will happen in September 2014, Scottish people, Scottish politicians and civic Scotland—if I may use that unwieldy phrase—are asking serious questions about what services will look like post-independence if they vote yes. We always say that Scotland can of course be an independent country, but what kind of country will it be? I am waiting for the hon. Member for Perth and North Perthshire (Pete Wishart) to jump up or tweet to say that all we are doing is scaremongering, but we are asking the legitimate questions that the people of Scotland want answered. If he does not want to take my word for that, an article a few weeks ago by Lesley Riddoch, who is certainly a vocal supporter of the yes campaign, says that
“Scots will be jumpy about the possibility of losing access to the Post Office and Royal Mail. A generation of Scots grew up with Postman Pat and helped reverse the Post Office’s ill-fated transformation into Consignia.”
No one knows what postal service will look like in an independent Scotland. Even Lesley Riddoch is asking questions that the SNP and the Scottish Government have not been able to answer.
The postal network in Scotland is critical to not only the economy and business, but the people who live there. Whether a letter is posted from Orkney to Oxford or from Peterborough to Edinburgh—I should have said Perth to keep the peace going and please the hon. Member for Perth and North Perthshire—there is one cost and the exactly the same very high service standards. My hon. Friend the Member for Glasgow South West has already mentioned the one-price, equal service and that service standards for private companies are not as high, which has given Royal Mail an unlevel playing field to compete on against private companies. Statistics from the Federation of Small Businesses show that Scottish businesses rely on Royal Mail more than businesses in the rest of the UK—56% to 42%. That highlights a fact that we will talk about when we go on to other issues: Scotland relies on the Post Office and Royal Mail far more than other parts of the UK. There are proportionately more post offices in Scotland.
The statistics in the wonderful briefing from the National Federation of SubPostmasters speak for themselves. There are 1,415 post offices on Scotland, of which 67.5% are rural, as opposed to just under 55% in the rest of the UK. Scotland has 12% of UK post offices with 8.3% of the population, so we have proportionately more in Scotland. Those statistics alone tell us that the post office network, as opposed to Royal Mail, in Scotland is significantly more expensive to operate, because there are more post offices and more rural post offices. We know about the social side of post offices in rural areas.
We need to know what the SNP and the Scottish Government plan to do with postal services in Scotland. They have said that they will abide by EU directives. There are questions for a university thesis about whether we will be in the EU, but for the sake of argument, I shall use the hypothetical scenario that Scotland will be, so the EU directive covering the universal service obligation baseline will kick in. The UK has gold-plating on top of that baseline—the only EU directive that the UK Government support gold-plating—which says six days a week, one price, anywhere.
If the Scottish Government maintain the six-days-a-week universal service obligation, as they confirmed last week under questioning from the Select Committee on Business, Innovation and Skills, the next question to ask, after congratulating them on making one commitment, is, how will they pay for it? How much will that mean in subsidies for the post office network? How much will it mean in subsidies for the Royal Mail network? How much will a stamp cost in Scotland for internal and external mail? How much will it cost to post a letter from Newcastle to Edinburgh?
The hon. Member for Angus (Mr Weir) says that Ireland is covered by the same price, but that is Ireland’s choice; England’s choice could be that they will use cross-border postal services at international or European rates. It is England’s decision, not the decision of Scotland or the Scottish people.
We have looked at post office statistics. We heard from my hon. Friend the Member for Dumfries and Galloway (Mr Brown) about the extreme pressures at the moment on sub-postmasters and their incomes, which continue to drop. If Royal Mail is privatised, which will be announced this afternoon, there are grave dangers that the inter-business agreement will be either salami-sliced between now and its renewal in 2022 or disappear altogether. What do the Scottish Government guarantee will be the relationship between the Post Office and Royal Mail at separation? How much will it cost at separation and how much will the inter-business agreement provide to the post office network to maintain the incomes that my hon. Friend mentioned?
Mr Weir
The hon. Gentleman asks lots of questions—obviously, the Scottish Government will have figures to answer many of them—but can he answer the same questions on what the position will be in the UK? There is uncertainty in privatisation and in the interaction between a privatised Royal Mail and the post office network and Post Office Ltd, if privatisation goes ahead.
Ian Murray
Surely, that is a question for the Minister to answer. The Opposition are saying clearly that privatisation of postal services in the UK is wrong; we should not privatise Royal Mail, because of the threats to the inter-business agreement, the universal service obligation and the regulatory framework. The regulatory framework provides us with another example of issues that will have to be resolved. What will it look like? Who will regulate postal services in Scotland? What are the parameters under which the services will operate?
We are running out of time and I want the Minister to be able to answer the questions. The Opposition are constantly accused of scaremongering when we pose legitimate questions as simple as, how much will it cost to post a Christmas card from Edinburgh to Glasgow first class? I want to send one to my hon. Friend the Member for Glasgow South West. He is on my Christmas card list. I probably will send him one. How much will it cost? That is not scaremongering. It is a simple and straightforward question.
As we sit in this Chamber today, it is clear that the Scottish Labour party is the only party standing up for the universal service obligation in Scotland. The Conservatives and the Liberal Democrats want to privatise it, and the SNP has absolutely no answers to the basic questions about how it will be maintained. The message must go out loud and clear that, until the SNP can answer those basic questions, it cannot tell us how to maintain the universal service obligation and postal services in Scotland.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
It is a great pleasure to serve under your chairmanship, Mr Hood. How apt it is to have a Scot in the Chair for a debate on the important matter of postal services in Scotland post-2014. I thank the hon. Member for Glasgow South West (Mr Davidson) for securing the debate, and for his wide-ranging introductory speech. We have covered a good amount of ground today; indeed, I wondered at times whether we were in a rerun of a debate from two weeks ago on the privatisation of Royal Mail. I know that the hon. Gentleman was unfortunately not able to attend that debate, but I hope he is able to be in the Chamber later today for the Secretary of State’s statement on this issue. The hon. Member for Angus (Mr Weir) mentioned that there may well be further opportunities for discussion in Backbench Business Committee debates, if the Committee so agrees, so I am sure that we will return to the issue time and again over the next few months, and beyond.
In 2014 we face an historic choice in Scotland—arguably the most important vote that Scots will have cast in decades. I hope that there will be a high turnout in the independence referendum, and I very much believe that the Scottish people will decide to reject the notion of independence because we are better off as part of the United Kingdom. It is important that over the next 14 months or so we continue to have a full and healthy debate about all aspects of what such a change would mean for everyday life in Scotland. The Government are, of course, making the case that Scotland should remain in the United Kingdom, and as part of that we are carrying out a programme of analysis across a number of Departments about Scotland’s place in the UK and how it contributes to, and benefits from being part of, the UK.
I am sure that right hon. and hon. Members are aware of the paper that the Department for Business, Innovation and Skills produced on 14 June, which demonstrated that Scotland and the rest of the UK benefit from the domestic market and the shared business framework that underpins it. The paper had a section on postal services as part of a more general consideration of infrastructure in Scotland. We take the view that we are better and stronger together as part of the United Kingdom. We are not making contingency plans for the Scottish people deciding to leave the United Kingdom because we do not believe that that will be the outcome, but it is absolutely for the Scottish Government to set out what would happen in that scenario, given that it is they who are advocating the change, and that is a challenge for the SNP.
We have had a fair challenge from the hon. Member for Edinburgh South (Ian Murray) about the price of a stamp for a Christmas card because, although we have e-mail these days, there is something lovely about sending and receiving Christmas cards and people want to know how much it will cost. There are question marks over what the cost would be in an independent Scotland.
Mr Weir
The Minister says that the Scottish Government or the SNP have to make clear the cost of sending a Christmas card post-independence. However, under her privatisation proposals we do not know what the cost will be in 2016 for sending a Christmas card in the UK whether or not there is independence for Scotland, because there is no longer a price cap on anything other than second-class mail.
Jo Swinson
I welcome the hon. Gentleman’s intervention because it gives me the opportunity to confirm and clarify the situation. I appreciate that there are strong views on different sides about the privatisation of Royal Mail, but many wild stories have been going about. It is absolutely clear that the universal service obligation remains. The obligation is enshrined in the Postal Services Act 2011, which was passed by this Parliament. The Act sets out that there has to be a six-days-a-week service to every location at an affordable and uniform price. That provision is monitored by the regulator Ofcom, and will remain in place after privatisation. The exact same set of protections that is in place at the moment will, therefore, remain.
What is unclear, however, is what would happen in an independent Scotland. We do not know whether Scotland would be a member of the EU and therefore whether the EU postal services directive would apply. If we assumed that it did, there would have to be at least a five-days-a-week universal service—Ireland has such a service. Only five EU countries, including the UK, go beyond that and have a six-days-a-week service. We do not know whether it would be a five-day or a six-day service in an independent Scotland. The SNP says that it will give guarantees—I noted that from the speech made by the hon. Member for Angus—but it does not back up how it would do it.
This comes down to the basic economics point to which various hon. Members have referred, and which applies to both the Post Office and Royal Mail. What we have in Scotland is a different sort of demography and geography to that of the rest of the UK, which is something that the hon. Member for Glasgow North West (John Robertson) mentioned. His area is very urban, and the costs of the logistics of getting about to deliver letters are, therefore, lower than they would be in a very rural constituency. If one country has a higher proportion of rural areas and addresses than another—Scotland compared with the UK for example—the service becomes more expensive to operate, and that cost must be accounted for. An hon. Gentleman chuntered from a sedentary position, “Do you think that Scotland could not run a postal service?” Of course it could, but we need to know what the costs will be. To suggest that they would be the same as for running the service across the UK, where there is cross-subsidisation between more densely populated areas and rural areas to offset the higher costs in the latter, is to misunderstand the basic economics.
Anas Sarwar
I apologise to you, Mr Chairman, for chuntering from a sedentary position and getting told off by you, and at the same time I congratulate you on the fantastic jumper you are wearing on this summer’s day.
I have a great suggestion for ending the uncertainty, and the bickering between the Lib Dems and the SNP, and that is to vote no in the referendum next year and return a Labour Government in 2015.
Jo Swinson
I wonder which half. For clarity, I mean on the voting no to independence in 2014.
We have had queries about the price of a stamp and about the universal service operating for six days a week rather than for the number of days required by the EU. Those questions are for the Scottish Government. Indeed, the hon. Member for Glasgow North West outlined a whole host of questions that the Scottish Government need to answer.
I want to turn now to the hon. Member for Dumfries and Galloway (Mr Brown). I welcomed his contribution about post offices, a topic that was missing from this debate on postal services in Scotland. As I have tried to make clear, the subject under debate is a very separate issue to that of the Royal Mail. We have had a fair amount of confusion. Royal Mail and the Post Office are now separate entities. The latter is a separate company with its own board, which will be helpful to its ultimate success. We do not want to get confused, particularly when we are talking about privatisation.
The hon. Member for Glasgow South West said that he was astonished that Liberal Democrats were proposing the privatisation of Royal Mail. I accept that our 2010 manifesto was probably not high on his reading list, but it is bizarre to be accused of something being a huge surprise when it was clearly set out in our manifesto at the last election. We want Royal Mail to be able to access private capital so that it can provide a good service to customers because, ultimately, that is what is important, and when Royal Mail has to compete with schools and hospitals for capital it is not able to do that.
The situation for the Post Office is incredibly different. We are aiming for mutualisation, and the process is under way with a stakeholder forum that includes the National Federation of SubPostmasters, the Communication Workers Union, Government and others. It is important that we work towards a sustainable future for the Post Office.
Time is against me today. I conclude by saying that the post office network plays an important role in Scotland. The hon. Member for Dumfries and Galloway outlined some statistics and, as I promised yesterday, I will write to him on the issue he raised. The fact that Scotland has 12% of all post office branches and 15% of all rural branches shows that we have higher than our population share’s worth of post office services. Under an independent Scotland the service would, therefore, cost more, and the Scottish Government need to give answers to the Scottish people.