Future of Postal Services
(1 year, 11 months ago)
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Sir Gary Streeter (in the Chair)
Before I call Tahir Ali to move the motion, there is obviously a cast of thousands here. It is a one-hour debate, and the Opposition Front-Bench spokespeople will speak for five minutes and the Minister for 10 minutes. When Tahir has sat down, I will let you know what your life expectancy will be, but it will be about two minutes, so you should prepare for that. I might give you one minute more, Jeremy, but for most of you it will be two minutes.
Tahir Ali (Birmingham, Hall Green) (Lab)
I beg to move,
That this House has considered the future of postal services.
It is indeed a pleasure to serve under your chairmanship, Sir Gary, and I refer you to my entry in the Register of Members’ Financial Interests as a proud member of the Communication Workers Union and an employee of Royal Mail.
The question of the future of postal services has been thrown into stark relief in recent times. The pandemic meant that many were confined to their homes, reliant on deliveries to meet their basic needs. It became clear to everyone that postal workers were key to the economy and to the regular functioning of our society. For many during lockdown, the relief provided by our postal services was vital in maintaining wellbeing and keeping families and communities safe.
During the pandemic, the volume of parcels delivered grew by a staggering 50%, with a total of 4.2 billion parcels delivered in the year 2020-21. Royal Mail saw its parcel volumes increase by 30%, with a total of 1.7 billion parcels delivered, which means 40% of the total number of parcels delivered in the UK were delivered by Royal Mail.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
I congratulate the hon. Gentleman on securing the debate. While Royal Mail may have some challenges, it is important to recognise what it does well, which includes parcel delivery. With Evri, formerly known as Hermes, parcels are stolen, lost or delayed at huge cost to customers and businesses alike. Does the hon. Member agree that companies such as Evri should be held to account for their failings?
Tahir Ali
I agree with the hon. Member’s comments and I hope to cover that specific issue later in my speech. The longer interventions are, the less time other Members will get.
All Royal Mail deliveries were achieved in a way that satisfied most service users. Some 83% of residential customers said they were satisfied with Royal Mail’s service, while 79% of small and medium-sized enterprises said they were satisfied. That was all the result of hard work and sacrifice by Royal Mail staff, who increased the revenues of Royal Mail by a huge 40%, generating healthy profits of £758 million for the company in 2021.
However, £576 million of those profits were promptly paid out to shareholders, with the chief executive officer of Royal Mail, Simon Thompson, paying himself a massive bonus of £140,000. Let us pause for a minute and think about what that £570 million could have done if it had come into the Treasury. It could have contributed hugely towards money to pay nurses, doctors and ambulance drivers.
Ian Lavery (Wansbeck) (Lab)
I congratulate my hon. Friend on securing this timely debate. He mentioned the chief executive officer of Royal Mail, Simon Thompson. Does my hon. Friend agree that if Royal Mail is to be sorted out for the future, which the CWU was trying to do, Simon Thompson has no place as chief executive officer?
Dawn Butler (Brent Central) (Lab)
My hon. Friend is making a powerful speech, based on his 30 years’ experience working as a postie. As he said, if half the money given to shareholders was given to the actual workers, there would be no need for this dispute or strike. Does he agree that CWU members deserve a pay rise and that the company can afford it?
Tahir Ali
I thank my hon. Friend for her intervention; that is a very pertinent point. I stressed that £576 million, which she also referred to. This is not about affordability; this is about picking a fight with the workforce, who have put themselves at risk to make sure that we were safe and secure, and received our deliveries throughout the pandemic.
Imran Hussain (Bradford East) (Lab)
As noted, my hon. Friend is making a powerful case. Does he agree, following on from the previous points, that there can be no long-term sustainable future for our postal services while Royal Mail is paying millions to shareholders from its announced profit of £758 million, while at the same time cutting pay and condition for postal workers?
Tahir Ali
I could not agree more with my hon. Friend. Services in his region are delivered through Leeds mail centre, among others, which is one of the biggest in the region that he serves, yet many employees are now resorting to food banks to feed their families. In this day and age, it is absolutely shocking that a Royal Mail employee should be resorting to food banks.
Several hon. Members rose—
Tahir Ali
I will make a bit of progress before I give way, otherwise interventions are going to take over.
Staff were given a derisory pay offer, and faced an assault on working conditions and threats to cut up to 10,000 permanent jobs and replace them with self-employed drivers and agency workers. It has been left to the Communication Workers Union to challenge this attempt to restructure Royal Mail as a gig economy-style company and protect the interests of permanent members of staff. The recent industrial action, led by the CWU, reflects the anger and exasperation of employees, who have had enough of being overlooked and underrated. After several days of walkouts, 91.24% of workers voted in favour of continuing the strike action into the new year. If management continue to refuse to negotiate in good faith and reach a deal with workers, disruption could continue.
However, I know that staff at Royal Mail do not want to be in this situation. They do not want to be on strike, but they feel as though their hand has been forced. I know this because I spent my working life at Royal Mail—my hon. Friend the Member for Brent Central (Dawn Butler) almost gave my age away there; I did not think I was even 30 years old—and I know the values and principles that motivate all who work there. I have experienced at first hand the dedication and professionalism of Royal Mail staff, and I know that they put the needs of service users and communities at the very centre of their efforts.
Mohammad Yasin (Bedford) (Lab)
When Royal Mail made a record £758 million profit last year, surely it can invest in its staff to continue to deliver on the universal service obligation that it promised its customers?
Tahir Ali
My hon. Friend makes a very important point, which has been echoed in previous interventions. We will be calling on the Minister to go back to the Royal Mail board and stress the need to resolve this issue, because it is not one of affordability.
Royal Mail has, through thick and thin, managed to provide a truly excellent and universal service. Despite the shambolic privatisation of Royal Mail, the ethos of those working within it is still one of public service. Royal Mail was founded on the principle of universal service, and its staff still stand by that principle today. However, the current leadership of Royal Mail seems to be moving the company further and further away from its public service ethos, and seeking to emulate multinationals such as Amazon, DPD and DHL, where bogus self-employment is rife and pay and working conditions are abysmal.
Bell Ribeiro-Addy (Streatham) (Lab)
I thank my hon. Friend for giving way; he is making a fantastic speech. Does he agree that if Royal Mail cannot operate without driving down workers’ pay and cutting jobs because its first priority is clearly always its shareholders, it has failed in its stated aim to provide the public service that it is meant to? Does he agree that that is an argument for taking Royal Mail back into public ownership? In my view and the view of the overwhelming majority of the public, that is where it belongs.
Tahir Ali
I thank my hon. Friend for that intervention, and I could not agree more.
I have highlighted a glimpse of the bleak future that the management at Royal Mail want: poorer pay, poorer conditions, overworked staff, a zero-hour workforce and a service that is neither universal nor satisfactory to the customer. That has been seen in the steady erosion of the universal service obligation, along with the recent announcement that Royal Mail will be split into two entities and potentially sold off to the asset-stripping company Vesa Equity Investment, which is currently its largest shareholder.
It is evident from this that Royal Mail profiteering is becoming the name of the game. The billions in revenue generated by Royal Mail staff are eaten up by shareholders and management, who pay themselves huge bonuses while staff struggle to make ends meet. Instead of being reinvested to truly modernise and improve Royal Mail, this revenue is being used to pay off shareholders.
It is clear to me, therefore, that there are two possible futures for Royal Mail: one as a universal public service provided with compassion and dedication by employees who are valued and respected; and the other just as a delivery company, to be pumped for profit and asset-stripped, at the expense of service users and with workers’ pay and conditions eroded. What does all of this signal for the future of postal services in the UK?
John Spellar (Warley) (Lab)
I thank my hon. Friend for giving way; he is making an excellent speech. Is it not, even in commercial terms, an incredibly short-term prospect? Fundamentally, the current management of Royal Mail are trashing the business and will therefore end up, even on their own terms, with a much-weakened company, which unfortunately may then have to be nationalised because it is failing. The service that it is providing is so bad that people are moving away from it. That really is a national crisis that requires Government intervention.
Tahir Ali
I could not agree more with my right hon. Friend, who is a neighbouring MP from my region. This will turn Royal Mail into a badly performing company. CEOs and management move on, but it is the employees who stay and have to pick up the pieces.
I believe that the present circumstances offer us two possible paths forward: one ensuring that Royal Mail continues to offer an exemplary public service to all in the UK, with the profits of expanding operations going into decent pay and conditions for staff, as well as improvements to the service overall; and another in which Royal Mail is stripped of its public service ethos and reorganised to generate maximum profits for shareholders, while the service loses out to private competition. I believe that the choice is an obvious one. Royal Mail should be considered a public service, and therefore it should be owned and governed as one. I believe that Royal Mail should be renationalised.
Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)
I thank my hon. Friend for giving way and for securing this debate. As we all know, he has a huge interest in the service and has worked for a long period in it, supported by the people who work continuously. I visited a number of post offices and distribution offices during Christmas, when all the cards and everything else are sent.
This current management structure is purely about asset-stripping and making money out of the service in the short term, and getting rid of the whole service. I think it is incumbent on this Government and the Minister who is here today to have a far more serious debate—I am sure that my hon. Friend would lead it—about ensuring that Royal Mail remains a proper public service for all those people, from grandparents to grandchildren, who enjoy all the cards and other mail that they receive every day.
Sir Gary Streeter (in the Chair)
Order. I remind hon. Members that interventions should be brief. If we have many more, there will not be any time for speeches.
Tahir Ali
I thank my hon. Friend for his intervention. He is always keen to visit the local mail centre. Under the boundary changes, that mail centre will fall in his constituency, so we can visit it jointly.
I believe that Royal Mail should be renationalised, and I am not alone. A recent poll showed that 68% of the public back the renationalisation of Royal Mail, and studies have highlighted that renationalisation might save £171 million a year. However, we cannot talk about postal services and the renationalisation of Royal Mail without discussing the post office network. The network is inarguably one of the most important for small businesses and local communities, which rely on their local post offices to collect and receive parcels and letters, as well as to export items all over the world.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
As my hon. Friend is aware, there are only 116 Crown post offices left. When it comes to closing banks, part of the Government’s strategy is that people can access banking services and cash from their post offices. Does he agree that it is highly unlikely that people can access banking services from a post office when that post office no longer exists?
Tahir Ali
My hon. Friend makes a very important point. If a post office operates as a franchise, it can close shop and go at any time. When someone is providing a public service, they have a duty of care towards the community. In rural areas, post offices are usually the only contact that people—especially elderly people—have with someone who is providing them with a service.
The value of postal services must not be overlooked. Citizens Advice reports that one in five residents visit the post office at least once a week, and in rural areas that figure is one in four people. That shows the continued importance of post offices to constituents.
Mrs Paulette Hamilton (Birmingham, Erdington) (Lab)
I thank my hon. Friend for securing such an important debate. Post office staff work really hard, including in Erdington, Kingstanding and Castle Vale. We have seven post offices, but I understand that, despite one in five people visiting post offices every week, there are serious concerns about franchises being lost across the country. Does my hon. Friend agree that the Government should fulfil their duty and ensure that post offices are protected?
Tahir Ali
My hon. Friend makes an important point: we should not just look at the Post Office board; the Government have a role to play. I am sure that the Minister will respond to that.
Online shopping is growing exponentially in the UK, with the parcel market growing to over 50% of all post since 2010. Over 130 million parcels have been sent in the UK by small businesses. That has placed pressure on the postal sector to hire more employees and open more post office branches, with 11,365 branches open by March 2022. The postal service has worked hard to keep up with the surge of technology by signing contracts with Amazon, DHL and DPD, among others, to introduce click and collect services, and reaching agreements to deliver parcels to post office branches to meet higher customer expectations.
Despite all the changes, however, there are big cracks in the post office network that gesture towards a bleak future. Government funding for post offices through the network subsidy and investment grants declined from £410 million in 2012-13 to just £120 million in 2020-21—a reduction of 71%. Post office branches have been opened, but out of the 11,000-plus post offices, only 4,000 are open seven days a week and many provide only partial outreach services. By September 2021, over 1,200 branches had closed, which is double the number five years ago.
The accessibility of branches has become a massive issue in recent years; some constituents, especially in rural areas, only have a few post offices near them, and those either work on a part-time basis or are temporarily closed. Not all residents are tech savvy—I am not, either—meaning that post offices are a necessity for some, especially for banking. Over 110 million banking transactions were carried out in post offices in 2017. The number of branch closures has been rising steadily, and it is becoming harder for communities and businesses to access post offices.
The Government have played their part in creating an uncertain future for postal services by severely downplaying their role in helping the community and the economy, and significantly reducing investment in the network. Nick Read, the chief executive of Post Office, expresses the same concerns. He stated that the Government “should not overlook” the role of post offices and postmasters in keeping national and local communities connected, and urged the Government to extend their support for post office branches with energy bills beyond March 2023 to keep the postal service alive.
The CWU has described the continued selling off of post offices as “backdoor privatisation”, an assessment I agree with. It is evident that the increase in parcel delivery and collection, along with e-commerce, gives the Post Office a new opportunity for future growth. That is why we must continue to foster and grow our post office network through investment and not through sell-offs to the highest bidder.
To conclude, I have some pertinent questions for the Minister. First, at a time when the Government claim to be levelling up the nation, what are they doing to increase the presence of post offices in rural areas where elderly populations are reliant on these services? Furthermore, as more post offices are partial outreach services open for an average of five and a half hours a week, what impact assessment will the Government undertake to ensure that every member of the public has sufficient access to these vital services? Will the Government commit to restoring the post office network grant to previous levels as a means of providing real investment and modernisation to the network?
Do the Government agree that Royal Mail should see being the universal service obligation provider as a competitive advantage, rather than as something to be whittled away over time? Do they accept that those hard-working postal workers who put their lives on the line during covid-19 should be considered essential workers key to the national infrastructure? Will the Government confirm that they stand against the restructuring of Royal Mail into a casualised, gig economy-style service, which will prove detrimental to both staff and service users?
Will the Minister explain the reasoning behind allowing Vesa Equity to acquire a controlling stake in Royal Mail, particularly given the threat it poses to the future of both Royal Mail and universal UK postal services? Finally, does he agree that a postie is there for life, not just for Christmas?
Several hon. Members rose—
Sir Gary Streeter (in the Chair)
Order. Colleagues, the wind-ups will begin at 5.38 pm. That gives us 15 minutes. Twelve people were standing, so you have one and a half minutes each.
Andy Carter (Warrington South) (Con)
Thank you, Sir Gary. Occasionally, sitting on the Government Benches, I wonder whether I am going to get in on a debate, but today I have. I thank the hon. Member for Birmingham, Hall Green (Tahir Ali) for bringing forward the debate. I am conscious that there is another debate later in the week on a similar topic, so I will confine my observations to two or three areas.
Let me start by saying that I agree with many of the things that the hon. Member raised about the hard-working posties who deliver mail to homes across the UK. They provide an invaluable service. Anyone who recognises the time spent waiting at Christmas for a card or parcel to arrive knows how important that service is. But it is also important to say that when the market changes, companies operating in those sectors have to change. If they do not, they simply will not be around in the future.
I put that point in the context of the number of letters that are sent by individuals in the UK annually. In 2004-05, Royal Mail delivered around 20 billion letters. Last year, that figure had dropped to 8 billion. The change is dramatic, and is not surprising when we consider how we live our lives today. We simply do not send as many things in the post as we once did.
While I absolutely agree that the universal service obligation should be retained, there is a need for Royal Mail to reconsider how it operates, to ensure that everybody continues to get the services. Crucially, it is the parcel market that is important. That is a vital sector for my constituency and I look forward to speaking further on this issue in coming weeks.
Sir Gary Streeter (in the Chair)
One and a half minutes flies by. I call Jeremy Corbyn.
Jeremy Corbyn (Islington North) (Ind)
I thank the hon. Member for Birmingham, Hall Green (Tahir Ali) for securing the debate. The current dispute of Royal Mail workers with the Royal Mail Group, led by the CWU, is appalling because of the sacrifices that those workers are making. I have stood with them on many picket lines, in my constituency and other places, and talked to them about the way their jobs have changed and the stress that they are under. They are now threatened with job losses through redundancy, a below-inflation pay rise and a speeding up of the way in which their work is done. The situation is appalling.
We need to value our postal workers for being part of our communities and for their dedication. Our service was unfortunately privatised by the coalition Government —thank you, Liberal Democrats, for your contribution to that Government—and separated from the Post Office. That is absolutely the wrong way to do things. We ought to keep the Post Office and Royal Mail as one.
We should absolutely retain the universal service obligation, so that every address in the whole country can get a letter or parcel. The hon. Member for Warrington South (Andy Carter) said that the number of letters has reduced. Yes it has, and the number of parcels has increased. The world has changed, but Royal Mail is there, with the universal service obligation, to meet all those changes in our society. If we take the universal service obligation away, we will be left with a lot of pretty incompetent private sector delivery companies, which simply will not be up to the mark.
Jeremy Corbyn
It is up to the Government to intervene now to protect the USO and take Royal Mail back into public ownership, which it should never have left.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I congratulate the hon. Member for Birmingham, Hall Green (Tahir Ali) on securing the debate. This issue clearly requires a debate, with more time, on the Floor of the House.
The current parlous state of industrial relations within Royal Mail has been felt particularly acutely in the Northern Isles. A number of people have spoken about the position of various courier companies and the poor quality of their service. However, for many businesses in my constituency, the option of moving from an unreliable Royal Mail service to those other companies is simply not open to them, because those companies do not operate in the Northern Isles. That is why the universal service is particularly important for us.
The inability of businesses in my constituency—those that offer food and drink and send out hampers, the various craft businesses, and the whole range of other companies that have diversified their business model in recent years to incorporate mail order—to send out their products has been catastrophic. We have felt the impact more acutely than any other part of the country.
This is a regulated business, and it is clear that Ofcom has certain powers at its disposal to protect the universal service. It is surely necessary now for it to come forward. Instead of entertaining talk from Royal Mail about how it can reduce the universal service, Ofcom should look at how it uses those powers to protect it.
Holly Lynch (Halifax) (Lab)
First, I want to pay tribute to my local posties, Wayne and Mark, who are incredible. Wayne, in particular, went absolutely over and above when I was heavily pregnant and then had a newborn. He always did everything he could not to generate extra journeys for me, knowing how difficult that can be with a newborn. That is the value of local posties who care. We are so grateful for the service that they provide, but we stand to lose it if we are not careful.
I tabled written parliamentary questions to the Minister at the end of November, asking what discussions his Department had had with Royal Mail Group on six-day letter deliveries and the future of the universal service obligation. I was reassured that the Government said they had no current plans to change the statutory minimum requirements of the universal postal service. However, in a statement on 17 November, Royal Mail said:
“A sustainable future must also include urgent reform of the Universal Service. Government has now been approached to seek an early move to five day letter delivery, whilst we continue to improve parcel services.”
We are clear in our understanding that what is going on at Royal Mail is a real prioritisation of parcels over letters. The only difference between a letter and a parcel might be the cost to send, rather than the value of the content. Is that not what the universal service obligation is there to recognise and protect? I simply ask the Minister: what are the Government doing to ensure that Ofcom is playing its role in holding Royal Mail to account on its service obligations, and what is he doing to make sure that we look after postal workers into the future?
Kim Johnson (Liverpool, Riverside) (Lab)
It is a pleasure to serve under your chairmanship, Sir Gary. I send my solidarity and support to striking postal workers, who are fighting for better terms and conditions and to save our vital postal service. Since the service was sold off at a bargain basement price by the Con-Dem coalition, workers’ rights have been systemically undermined. The union-busting treachery and threats by Royal Mail are destructive and smack of desperation. It is using bullying and intimidation tactics, bribing managers with massive bonuses to deliver mail on strike days, spending millions on agency workers, boasting of a £1.7 billion fund to crush its own workers rather than using that money to settle the dispute and restore the service, and threatening to destroy the jobs of posties and remove their union from the workplace.
Royal Mail must agree immediately to the CWU demands of a backdated pay deal of 9%, long-term job security, an end to the tax on union representatives and members, and a commitment to negotiations on the company’s future. The Government must agree to end the closure of post offices and invest in the institutions that provide vital services to our communities, particularly those in remote and left-behind areas. They must investigate and bring an end to the bogus self-employment practices that are on the increase in the sector. We must end this race to the bottom on pay, terms and conditions. Anything less risks the loss of this vital service, and a great loss to our communities. Solidarity to the CWU and all the postal workers.
Rachael Maskell (York Central) (Lab/Co-op)
I congratulate my hon. Friend the Member for Birmingham, Hall Green (Tahir Ali). Once a successful, proud British enterprise in the hands of the British public, Royal Mail is being driven into the gig economy while senior managers are milking profits and funnelling £560 million in payouts to shareholders. They did not get up in the middle of the night to travel to all parts of our country, especially during covid, to care for our communities.
So well depicted in Ken Loach’s film “Sorry We Missed You”, the gig economy’s long hours, low wages and punitive, bogus self-employment will soon besmirch Royal Mail as it sells off the King’s head. Royal Mail is wanting to break up the universal service obligations, sack 10,000 posties and be the next P&O as it recruits agency staff and owner drivers at the expense of the current workforce, further ripping up the pathway to change without having to give account.
This Government are standing by as this next chapter of fire and hire plays out. What have they done? They have walked away when they should be pressing in. They have opened the door for investors—a foreign private equity firm—to sweep in and asset strip. So much for giving back control—they are, to a Czech oligarch. I thank the CWU and its members for standing up for our postal service and bringing it to our attention. As with other companies in failure, the Government will put in place an operator of last resort. We are now at that last resort, and we need the Government to step in and nationalise this company.
Sir Gary Streeter (in the Chair)
After Richard Burgon, Members will have one minute each, so that everyone can get in.
Richard Burgon (Leeds East) (Lab)
I have been speaking to local posties on the Harehills and Seacroft picket lines in my Leeds East constituency. It is clear that our posties care deeply about this service, but they are being attacked by Simon Thompson and the Royal Mail bosses. There are attacks on jobs, pay and, crucially, hard-won terms and conditions and, of course, the service itself—on the universal service obligation. Only the other Friday, 17,500 postal workers were in Parliament Square because they had had enough of being attacked by Royal Mail bosses and not being supported by the Government. They want to save this service. That is what it is all about.
If we need any further proof that Simon Thompson and the Royal Mail bosses have embarked on a path of confrontation, not negotiation, let us look at the fact that over 100 Communication Workers Union representatives have been suspended during this strike by the bosses. That smells rotten to me, and it looks like an attempt at union busting. We need a real change and solidarity with the Communication Workers Union. Anybody who cares about our public services and the future of Royal Mail should listen to the workers who keep it going day in, day out, in all weathers. Let us support them, and let us have action from the Government to turn this around.
Sarah Green (Chesham and Amersham) (LD)
I am grateful to the hon. Member for Birmingham, Hall Green (Tahir Ali) for securing the debate. For years, Royal Mail has repeatedly fallen short of several of the performance targets that it is required to hit. The most recent quality of service report reveals that, in the second quarter of 2022, it missed its first class USO by a staggering 20%. As Matthew Upton, the Director of Policy at Citizens Advice has said:
“Ofcom is letting Royal Mail off the hook for substantial mail delays. Failure to hit a single quarterly target for over two years is simply unacceptable.”
While Royal Mail’s year-end quality of service reports chart some improvement, I am not satisfied with this. Royal Mail was closer to hitting several of its targets last year, but it still consistently failed to hit key delivery targets in every quarter since the emergency regulatory period for covid came to an end. Ofcom must provide us with reassurance that unless there is substantial improvement, it will take enforcement action. After all, what do targets really mean if nobody is ensuring that they are being met?
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
I thank my hon. Friend the Member for Birmingham, Hall Green (Tahir Ali) and, of course, send my support to all the posties out on strike today.
I wonder if, in his remarks, the Minister could focus on the issue of our Crown post offices being replaced by agency-franchised offices instead. These agency-franchised offices obviously do not offer the same services as the Crown post offices, but that shows a disjoint and a lack of decision making in Government.
On the one hand, we have the Financial Services and Markets Bill—I sat on the Public Bill Committee—in which the Government said there will be continued access to cash and banking services through the postal network. How can that be, when they are allowing those postal networks to be replaced by agency networks instead? We will end up with fewer people having access to cash and banking services. While the banks close, the post offices are not there to replace them. I hope the Minister will address the point about financial inclusion when he replies to the debate.
Dame Nia Griffith (Llanelli) (Lab)
We in the Labour party made our fears clearly known back in 2010, when the right hon. Member for Kingston and Surbiton (Ed Davey), the current leader of the Liberal Democrats, led the charge of the Conservative-Liberal Democrat coalition Government to privatise Royal Mail.
We warned of the danger to the six-day universal service obligation, which is so important to our households and to businesses across the country, and the envy of many other countries. We warned against not having a major Government shareholding in Royal Mail and of the danger of asset stripping. Our fears are now being realised, with a threat to the universal service obligation.
We hear about the £400 million paid out in dividends and £167 million in share buy-backs, so it is no wonder that workers are utterly incredulous to find that jobs are being cut and they are being told that there is no money for reasonable pay rises. If we want a good service, we need a loyal, committed workforce, which is what Royal Mail has at present, but treating workers without respect and not having proper terms and conditions will soon mean losing that trust.
We need partnership working—management, workers and trade unions. That gives us a good service, which in turn benefits consumers. The workers stay; they create stability, knowledge and experience; and they know their routes, which can be covered in absences. If we do not have that, we will have greater staff turnover, an erosion of trust and, ultimately, the demise of the business.
Jim Shannon (Strangford) (DUP)
First of all, I will make a plea for post offices. For vulnerable people, those aged over 65, disabled people and those who live in rural areas, the post office clearly provides a wide range of essential services—services for the local community and citizens, including banking, bill payments and cash withdrawal. It helps older people seek their pensions and provides a sense of community for older citizens living in rural areas. Indeed, postmasters and postmistresses can often be the first to note if an elderly patron has not been in for a while, and many a life is saved by the actions taken. Post offices will also play a vital role in citizens receiving their £600 energy support payment in the coming weeks. Some 49% of all customers pick up Government forms such as applications for driving licences or passports at post offices.
I want to make a plea to the Minister on behalf of post offices. There are 11,400 post offices in the UK, visited by 28 million people a week. I support the debate and I hope that the Minister can support us.
Sir Gary Streeter (in the Chair)
Thank you, Mr Shannon, and I thank colleagues for their co-operation. We now move to the Front-Bench speeches, and it is a delight to call Marion Fellows.
Marion Fellows (Motherwell and Wishaw) (SNP)
It is a pleasure to serve under your chairmanship, Sir Gary, and I will speak very fast. I thank the hon. Member for Birmingham, Hall Green (Tahir Ali) for securing this important debate. I could not disagree with one word that he said.
I should declare an interest as I have a nephew who is a postie—he works in the delivery office—and I am chair of the post offices all-party parliamentary group. I have worked closely with the Minister and with previous Ministers on the subject, but this country has got it all wrong. The Postal Services Act 2011, which split Royal Mail and Post Office Ltd, led directly to where we are today. We should value post offices—I do, and I know that many Members do—but we should also value postal workers. The universal service obligation is even more important in a country such as Scotland.
The SNP has opposed such changes many times, starting back with Mike Weir in 2010. It should not be a surprise that we think that the post office network and Royal Mail should be put back together again and should be nationalised. I have worked closely with the Communication Workers Union and I have stood on picket lines myself. I think—I know—that the system is not working the way it is just now. Giving profits to shareholders is not the way it should work.
To go back to the universal service obligation, we talk about the growth in parcel delivery, but what about letters to people about hospital appointments? What about really important letters from His Majesty’s Revenue and Customs and other Government agencies? Those things are causing great disruption to those who most need public services, and one of the public services they most need is a properly functioning Post Office/Royal Mail Group and post office network.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a pleasure to serve under your chairmanship, Sir Gary. I thank my hon. Friend the Member for Birmingham, Hall Green (Tahir Ali) for securing this incredibly vital debate. He brings a wealth of expertise of the issue, having worked for both Royal Mail and the CWU.
After almost 500 years as a public institution, Royal Mail today connects more than 32 million addresses across the United Kingdom and is the UK’s sole designated universal service provider. Its 160,000 staff are essential workers. Whether they were delivering tens of millions of test and trace kits or being a point of contact for those isolating during the pandemic, we in the Opposition do not forget their incredibly vital work during that dark time, or since, and before. That is why the debate is so well attended by Opposition Members and why we have had such fantastic and passionate contributions from my hon. Friends the Members for Halifax (Holly Lynch), for Liverpool, Riverside (Kim Johnson), for York Central (Rachael Maskell), for Leeds East (Richard Burgon), for Kingston upon Hull West and Hessle (Emma Hardy) and for Llanelli (Dame Nia Griffith), as well as contributions from Members from all parties.
Despite this incredibly important public service and its importance to communities and the economy, the Government are failing postal service users and communities, putting ideology above competence. In July to September last year, Royal Mail delivered 72% of first class mail the next working day and 93% of second class within three working days, both below its targets. As we have also heard, the Conservative Government have overseen sharp increases in the number of so-called temporarily closed post offices and part-time outreach services, leading to significant and growing cracks in coverage. That trend is particularly severe in rural areas. Older and disabled people, carers, and people who do not use the internet, of whom there are still many, are disproportionately impacted. The current industrial dispute has had a huge impact on both workers and service users across the country. We in the Labour party are glad that Royal Mail has returned to the negotiating table, which is what we called for, but the Government really need to do their job to support a resolution. They owe that to Royal Mail as key workers, and to the public and businesses, all of which rely on Royal Mail.
The Government’s decisions on Royal Mail risk a disaster for customers and workers, and a degradation of Royal Mail as a major contributor to the UK economy. An organisation that was once thriving has had job losses in the thousands and a reduction in service, all while giving out over £400 million in dividends and £167 million in share buy-backs. The CWU has been raising concerns about the financial mismanagement of Royal Mail for several months, so can the Minister outline what discussions he has had with Royal Mail regarding its profits and dividends during the last financial year? Can he explain why workers and service users are being asked to pay more for less of a service, at a time when the cost of living crisis is impacting so many families across our nation?
As has been highlighted, there has been a decline in letter delivery. We understand that Royal Mail is seeking to grow parcel delivery, but that strategy appears to be stagnating, so what is the strategy now? Can the Minister say what his vision is for the future of postal services, and when he will act to ensure that Royal Mail returns to pre-pandemic levels of performance? Finally, the recent increase in the holding share by Vesa Equity, a company with links to Russia, is a matter of grave concern. Can the Minister outline the Government’s reasoning for not using the powers in the National Security and Investment Act 2021 in relation to that investment?
Only a Labour Government, supporting the partnership between management, workers and trade unions, can achieve lasting success for our postal services. In two days’ time, my hon. Friend the Member for Jarrow (Kate Osborne) will lead a debate on the universal service obligation, but can the Minister provide assurances today that this Government are committed to the USO, as we are, and has he made an assessment of the impact of a five-day service proposal on the economy? The Labour party will work with postal service providers to deliver vital goods and services, and to provide social value.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
Sir Gary, could you clarify exactly what time I can speak until, if I am to give the hon. Member for Birmingham, Hall Green (Tahir Ali), two minutes in which to wind up?
Kevin Hollinrake
Thank you. It is a pleasure to serve under your chairmanship, Sir Gary, and I congratulate the hon. Member for Birmingham, Hall Green, on securing today’s debate about the future of postal services, particularly given his experience and expertise. When somebody with that kind of experience and expertise speaks, we should all listen very carefully.
I agree with the hon. Gentleman that postal services are an integral part of the modern economy, allowing the smallest of businesses to connect with customers across the world and providing consumers with access to a vast range of products. The importance of the postal service to keeping people connected was never more apparent than during the coronavirus pandemic, and I am hugely grateful to the delivery workers who worked exceptionally hard to deliver letters and parcels in those very difficult circumstances. The post office network also plays a unique and vital role as part of the UK postal system, and I will address the points that were raised regarding that network shortly.
To deal first and foremost with the future of the universal postal service, which was raised by the hon. Member for Birmingham, Hall Green, the right hon. Members for Orkney and Shetland (Mr Carmichael) and for Islington North (Jeremy Corbyn), and others, the Government’s postal policy objective continues to be a financially sustainable and efficient universal service that meets the needs of users within an open and competitive postal market. That is why the six-day week, “one price goes anywhere” and the universal service remain at the heart of the regulatory regime, and why Ofcom has a primary duty to secure that provision.
To be completely clear, the Government currently have no plans to change the statutory minimum requirements of a universal postal service, which are set out in the Postal Services Act 2011. However, we accept that the universal postal service is facing challenges, particularly given the decline in letter volumes, which have halved since privatisation in 2013. That answers the question raised by the shadow Minister, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), about why people are paying more for less. Part of the difficulty is that the volumes have fallen so much, which affects revenue.
Chi Onwurah
I thank him for giving way, but he has not answered my question at all. There is a decline in one part of the market, but another part is growing. My question was: what is the vision?
Kevin Hollinrake
That is a separate point that I will come to, if I may. I have yet to hear a convincing case for the need for change to meet users’ needs and ensure the financial sustainability of a universal postal service. I have met with both Ofcom and Royal Mail management to discuss that issue. I have made it clear to Royal Mail that it needs to make any case for change to Ofcom, and that I will fully consider any advice the regulator gives me on the future scope of the universal postal service.
The hon. Members for Chesham and Amersham (Sarah Green) and for Motherwell and Wishaw (Marion Fellows), who I have worked with closely on other matters regarding the Post Office, raised concerns about quality of service. I am aware that over the last few years the business has faced increased pressures on its operations for a variety of reasons. First, there was the covid pandemic and its lingering effects; secondly, operational revisions were required to modernise and transform the business; and, most recently, there was the industrial dispute with the Communication Workers Union. I do not accept the point made by the hon. Member for Leeds East (Richard Burgon) that this is union busting. The management has been clear that there will be no compulsory redundancies, but these issues impact both the business and users of postal services, particularly when important mail items are delayed.
Richard Burgon
The Minister rejects my allegation that the bosses of Royal Mail are engaged in union busting, but does he not think it is rather strange that over 100 trade union representatives have suddenly been suspended by Royal Mail bosses in the course of the dispute? Is that not rather odd? What conclusion does he draw from that?
Kevin Hollinrake
We do not get involved in negotiations, as Royal Mail is clearly a private company. I welcome the fact that the CWU and Royal Mail are now sitting down with ACAS and trying to resolve the dispute. We should give that process time to reach a resolution. I understand that any strikes have been suspended until the outcome of those negotiations. As I say, the Government are not involved in negotiations because Royal Mail is a private company, but we will monitor the dispute closely, and urge Royal Mail and the Communications Workers Union to reach a resolution as soon as possible.
To ensure that consumers receive an adequate service, Royal Mail is required by Ofcom regulation to, among other things, meet certain performance targets relating to the delivery of universal service products. The regulator has the power to investigate and take enforcement action. Indeed, in 2020 it fined Royal Mail £1.5 million for missing its 2018-19 first-class national delivery targets. Ofcom investigated Royal Mail’s service quality performance in 2021-22, and in doing so considered evidence submitted by Royal Mail of
“exceptional events, beyond the company’s control”
that may explain why targets were missed. In that instance, Ofcom accepted that there had been a continued impact of covid-19 on Royal Mail service delivery, and concluded that
“it was not appropriate to find Royal Mail in breach of its regulatory obligations”.
However, Ofcom was clear that it does not expect covid-19 to have a continuing significant impact on service going forwards. It stated:
“We are concerned by the fact that Royal Mail’s performance in the early part of 2022-23 fell well short of where it should be. We believe the company has had plenty of time to learn lessons from the pandemic, and we are unlikely to consider the factors outlined above as exceptional and beyond its control in future.”
When it comes to renationalisation, we probably part company with many of those on the Opposition Benches who expressed views on the subject, including the hon. Member for York Central (Rachael Maskell), the right hon. Member for Islington North, the hon. Member for Birmingham, Hall Green, who sponsored the debate, the hon. Member for Llanelli (Dame Nia Griffith), and the hon. Member for Motherwell and Wishaw. I do not believe that renationalisation is the answer. Although there are undoubtably challenges facing Royal Mail, the Government are clear that renationalising the business is not the answer.
One of primary reasons for the sale was to enable Royal Mail to access the capital it needed to invest in and grow the business. When Royal Mail was independently reviewed in 2008 under the last Labour Government, we were told that it was underfunded and had not kept pace with equivalents around the world, which were 40% more efficient. Compare this to the present day: Royal Mail has invested over £2 billion in the UK business since privatisation, including £900 million over the last three years and £441 million in the last financial year in areas such as electric vans, two new parcel hubs, automation and improving its poorest performing delivery offices.
The hon. Member for Birmingham, Hall Green, mentioned the £576 million pounds distributed to shareholders. I point out that there are good years and poor years in terms of financial performance. In the first half of this financial year, I think Royal Mail declared a £219 million loss. That is in the marketplace, so it is not breaching any confidentiality.
Ian Lavery
Royal Mail made a £758 million profit, gave £567 million to shareholders and then, shortly afterwards—weeks afterwards—it said that it was making a loss of £1 million a day. The hon. Gentleman is a successful businessman. Would he not be asking questions?
Kevin Hollinrake
We should always ask questions. I have asked questions of Royal Mail in the various discussions we have had. It is fair to say, though, that when shareholders invest, their money is locked up in that capital. Those shareholders rightly expect a return on that capital, as any Government should. I do not think it is wrong to distribute investment returns where they are fair and proportionate. The hon. Gentleman cannot simply say that money should not have been distributed to shareholders, but it should be fair. There also has to be a consideration of the context: it was probably an exceptional year. This year is clearly far more difficult.
The performance of other parcel carriers, including Evri, was raised. I have had correspondence with various Members present about Evri. It is frustrating when deliveries do not arrive on time or are damaged. Consumers should raise complaints about the delivery of items with the retailer. They can do so through Delivery Law UK or the Citizens Advice consumer service, but the key thing is to get back to the retailer. No retailer would want to carry on with a parcel carrier that was not meeting its obligations.
The post office network is hugely important to us, and we need to maintain 11,500 branches. Ninety-nine per cent. of people in the country expect to live within three miles of a post office. That will continue, and we continue to invest; there was £2.5 billion in funding over the past 10 years, and will be £335 million over the next three years.
To conclude, I have set out that the Government remain committed to securing a sustainable universal service for users throughout the UK. There are currently no plans to change the minimum requirements of the service.
Tahir Ali
I want to respond forcefully on the issue of union-busting tactics. Within days of members taking industrial action, Royal Mail announced that it was taking 10,000 jobs away from workers to scare them into not going on strike. It says that it has more than £1 billion to break up the union. It is suspending union representatives without proper reason, just as a ploy to scaremonger and to bully the staff. An attack on one employee is an attack on all employees, and neither the CWU nor any employee will stand for that in any way, shape or form.
In this country, we can send a letter for 58p to Orkney or Shetland, or to the Isle of Wight. That is the only duty that the company has. None of the private companies is legally obliged to deliver to every single address in this country. We want a level playing field, but the profit and the cream are taken away by the other companies. Royal Mail is modernising—it has been—but the workers deserve more.