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Kate Osborne (Jarrow) (Lab)
I beg to move,
That this House has considered Royal Mail and the future of the Universal Service Obligation.
It is a pleasure to serve under your chairmanship, Ms Ali. The future of Royal Mail and the universal service obligation is important to us all. It is important for our communities and businesses, and for our economy. For many in rural communities, particularly the elderly, our posties are a lifeline. That was never more evident than during the pandemic. In November 2022, Royal Mail wrote to Ministers setting out its arguments for reducing the postal service to a five-day-a-week service, despite Ministers confirming that they did not want that to happen.
In Tuesday’s debate on the future of postal services, I was pleased to hear from the Minister that the Government remain committed to securing a sustainable universal service for users, and that there are currently no plans to change the minimum requirements of the service. Unfortunately, Royal Mail does not seem to be listening. Even after the Minister’s response on Tuesday, it wrote to me continuing to push for a reduction in the universal service obligation. Royal Mail took £758 million in profit last year, yet it is still pushing to reduce our services and to erode workers’ pay and conditions, and is threatening to cut thousands of jobs. The universal service obligation sets out that Royal Mail must provide a six-day-a-week, one-price-goes-anywhere postal service to the 32 million UK addresses. That obligation is overseen and monitored by Ofcom. I have spent this week meeting people from professional publishing agencies, business, industry and trade unions, as well as others, are all whom are keen to protect the future of Royal Mail. I have met representatives from Royal Mail, and my office met them again this week.
Royal Mail has been a huge part of my life. Before being elected the MP for Jarrow, I was employed by Royal Mail for 25 years. I joined the Communication Workers Union—or the Union of Communication Workers, as it was then known—on the very first day. I saw numerous chief executive officers come and go—a bit like Ministers—and take millions in pay-offs on their way out. We have had Adam Crozier, Moya Greene, Rico Back and Simon Thompson over the last 20-odd years. In 2010, Moya Greene was the highest-paid civil servant in the UK. Just three years later, she oversaw the privatisation of Royal Mail and then disappeared with a pay-off worth over £3 million and a pocket full of shares. Less than two years later, Rico Back left with around £3 million of shares. Now we have Simon Thompson, a CEO with no experience of logistics, who is hell-bent on inflaming industrial relations and destroying Royal Mail and our USO.
During the pandemic, posties were relied on to deliver covid tests, as well as deal with the huge increase in parcels. That led to an influx of cash that would not, of course, continue post-covid. Instead of using that extra money to transition back to a business-as-usual level of revenue, Thompson awarded £567 million to shareholders. Thompson is insisting on a confrontational row with Royal Mail employees and their trade unions, and is deliberately mismanaging our postal services to undermine them and to put pressure on Ministers to reduce the USO. The Government could help to solve the dispute by reiterating to Royal Mail that it should not be going down the gig economy path to a parcel service, and that the USO will not be reduced. Will the Minister commit to that?
During my years at Royal Mail as a union negotiator, I had many meetings with CEOs and management regarding pensions, pay, terms and conditions and working practices. We agreed changes to deal with new challenges, which were numerous. The workers know much more about the detail of everyday working practices than most, if not all, of the senior management teams. Workers and management negotiated, and we made changes together.
Instead of negotiating, Simon Thompson is attacking employees on social media, and taking disciplinary action against workers who are taking legitimate action. Rico Back, the former CEO, said that the management and board had “wasted time” and failed to negotiate properly with trade unions, and were on a
“confrontational path, which is not necessary.”
Will the Minister condemn the inflammatory actions of Royal Mail’s senior management team?
Yesterday, Royal Mail wrote to me, disputing that it is destroying the postal service. It said:
“We remain very much committed to the Universal Service.”
The next sentence contradicts that:
“Our request to the Government to move to a five-day letter service, comes from the fact that we want to better meet changing customer needs.”
How can it be fully committed to something that it is desperately trying to change? Royal Mail often cites the fall in letter volumes since privatisation, which the Minister mentioned in Tuesday’s debate; however, the price of first and second-class stamps has risen dramatically. Will the Minister confirm whether the USO is the financial burden that it is being portrayed as?
In response to the shadow Minister for employment rights and protections, my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), the Minister said that he had
“met both Ofcom and Royal Mail management to discuss”
the future of the postal service,
“made it clear to Royal Mail that it needs to make any case for change to Ofcom”,
and
“will fully consider any advice”—[Official Report, 10 January 2023; Vol. 725, c. 222WH.]
given by the regulator. I welcome that commitment, but will the Minister give an assurance that the process will be more thorough than the previous Ofcom review of users’ needs?
Many letters sent in the UK are non-USO mail, but they are delivered jointly over the same network. That mail includes important, time-sensitive information, such as letters from hospitals, His Majesty’s Revenue and Customs, communications from the police and legal documents, as well as current affairs magazines. The 2020 Ofcom review of users’ needs—often cited by Royal Mail, which claims the review found that five-day-per-week deliveries would meet residential and small and medium-sized enterprise user needs—did not properly account for large business users and non-USO mail. It is not a reliable review. It is certainly does not do a good enough job of showing the impact that the removal of Saturday deliveries would have.
The Royal Mail is a beloved national institution, loved by the public and relied on by many. It can have a vibrant future, but only if Ministers act now to stop the Royal Mail management team destroying the service. I hope that the Minister will respond to the important questions that I have raised, and that will be raised by others in the debate, and will commit to the retention of the USO’s six-day-a-week delivery service.
Several hon. Members rose—
Rushanara Ali (in the Chair)
Order. It is busy, and we have a number of speakers. I will set an informal time limit of four minutes to get everybody in, but we may have to adjust that. You are already doing so, but please remember to bob up and down after each speaker, so that I can call you.
Stephen Hammond (Wimbledon) (Con)
It is a pleasure to serve under your chairmanship, Ms Ali, and to contribute briefly to the debate. I will read out two emails from constituents. One says:
“My son was sent a Penalty Charge Notice”
on 25 November, but it did not arrive until 15 December. That was from Mrs Martin, of Dora Road in my constituency. Today I had an email from Mr Smith, who said that the “shambles” continues; the Christmas decorations are down and the left-overs have been consumed, but he is “still receiving Christmas cards”. The first email was from December 2021, and the second from December 2022. The problems we in Wimbledon are experiencing with Royal Mail are not just this year’s problems. I have had numerous meetings with Royal Mail and my constituents, and the unions attended one of them. The postal service in Wimbledon is not delivering for my constituents. There was a short-term improvement, and management promised that they would change some working practices, but none of that has happened.
Wimbledon suffers particularly. I heard the complaints of the hon. Member for Jarrow (Kate Osborne) about Royal Mail’s management, and I agree that they are undoubtedly partly to blame. However, the CWU headquarters are in Wimbledon, and the CWU sees the operation in my constituency as a trial of strength with management. That undoubtedly means that we get a worse service than pretty much anywhere else in London—probably than in most of the country. Frankly, that confrontational attitude hinders my constituents.
The debate is about the future of the universal service obligation, as the hon. Lady said. The universal service obligation set out in the Postal Services Act 2011, which privatised Royal Mail, should be adhered to for my constituents, as well as for everyone across this country. I note that the Government have said that they will not change the universal service obligation from six days to five. Can my hon. Friend the Minister confirm that, if the Government are ever minded to do so, they will set out a way for other industries not to be impacted by a decline in the service? Can he also confirm that they have instructed Royal Mail not to become a parcel-only service? Despite so much being done by email, the postal service is still hugely important to many of my constituents and, I am sure, those of other hon. Members.
What will the Minister do to ensure that Ofcom meets its obligations as a regulator? We have very few levers to pull that will influence Royal Mail, tell it what to do or tell it how to improve its service; Ofcom has those levers. I often receive emails from constituents who ask me why I have not done more, or why Ofcom is toothless. What will the Minister do to ensure that Ofcom, which seems to have been largely absent during the poor delivery of the service, meets its obligation to hold Royal Mail to account, and to ensure that Royal Mail meets its universal service obligation?
Clearly, the current dispute is a problem and results in pressure from both sides. I hope that the Minister can reassure us that the universal service obligation, which is so important to the constituents of Wimbledon and other places, will be met.
David Linden (Glasgow East) (SNP)
It is a pleasure to serve under your chairmanship, Ms Ali. I congratulate the hon. Member for Jarrow (Kate Osborne) on securing the debate, and offer my support to the CWU in the dispute with Royal Mail. I was privileged to stand on picket lines with Craig Anderson, Councillor John Carson and many others at the Glasgow south-east delivery office in Fullarton Drive, as well as at the Gartcraig delivery office. During those visits to picket lines, I heard one resounding message from the workforce: no one wants the strike. No one wants to lose their pay, particularly during a cost of living crisis; and no one wants to risk their employment. Our posties are striking because they do not want a vital service to be destroyed and torn apart, and they want to be paid fairly for the work that they contribute to the service.
Let me speak directly to Simon Thompson at Royal Mail. His behaviour throughout the dispute has been appalling. In a Zoom interview, someone wrote his lines on a whiteboard behind the camera; that was symptomatic of the intransigence of the Royal Mail senior management team. My constituents did not go out on their doorsteps on a Thursday night to clap for key workers only for Mr Thompson to treat his staff like crap. He must up his game, and if he cannot, he must resign. It is increasingly clear that he is the biggest stumbling block to a resolution to the dispute.
The truth is that consecutive Governments in Westminster have overseen the degradation of our postal services. If this Conservative Government let the USO end, it may be the straw that breaks the camel’s back. It is widely known that Royal Mail is the designated provider of the universal postal service. It delivers six days a week to 30 million addresses on these islands, and one price goes anywhere. That seemingly unalienable fact is now under threat.
Royal Mail bosses have shamefully approached the British Government seeking to change that agreement. They have asked to move from the minimum six-day delivery service to a five-day delivery service for letters; Saturdays would be excluded. They say that is to protect the sustainability of the universal service. The SNP entirely recognises the importance of the USO, particularly for our rural communities in Scotland, which are so important. We will continue to fight for its protection.
We need to look more at the obscene profits from Royal Mail. While it plans to cut services and pay for postal workers, it pays out excessive sums to its shareholders. In May 2022, Royal Mail Group announced record-breaking profits of £758 million in 2021, £567 million of which was promptly paid out to shareholders. Only weeks later, Royal Mail announced significant losses, alleging it was losing over £1 million a day. Shortly after that, it approached the British Government requesting to move from a six-day to a five-day delivery obligation. The senior leadership of Royal Mail have also used their mismanagement of funds to justify scrapping up to 10,000 postal worker jobs from the service by 2023, while they continue to recruit and retain many thousands of agency staff.
Is it any surprise that CWU members have gone on strike? After all—some Ministers would do well to realise this—the right to withdraw one’s labour is one of the most fundamental human rights. It is a right that the British Government are now seeking to deny. Let us be clear: the CWU is in dispute with Royal Mail over unacceptable changes to terms and conditions and the abandonment of mutually agreed plans for modernisation, and in defence of the service that postal workers provide. There is also the proposed 2% pay increase. The CWU is also asking for an inquiry into the mismanagement of Royal Mail and how that will undermine the USO.
I do not think that Royal Mail senior management are listening. It appears that every time I tweet something about Royal Mail, a letter arrives within days disputing what I have said. Perhaps Royal Mail’s senior management team should spend less time monitoring my Twitter account, and more time at the negotiating table with our colleagues in the CWU.
The end of Royal Mail would exacerbate regional inequalities at a time when the British Government claim to be levelling up these islands. Royal Mail must be renationalised, and a commitment must be made to ensuring that the USO remains an unalienable fact of the postal service. To sum up in four words: stand by your post.
Rachel Hopkins (Luton South) (Lab)
It is a pleasure to serve under your chairship, Ms Ali. I congratulate my hon. Friend the Member for Jarrow (Kate Osborne) on securing this important debate.
Royal Mail is a proud British institution, established by King Henry VIII in 1516. I begin by thanking postal workers in Luton and across the UK for their work all year round. I am pleased to have a delivery office in my constituency of Luton South; I have visited it many times. I have spoken with postal workers and their local and regional Communication Workers Union representatives, and I have seen at first hand their dedication to delivering—literally and metaphorically—for our community.
Postal workers take huge pride in their job, and want to ensure the long-term success of the service. Strike action is never taken lightly. Substantial real-terms pay cuts and attacks on terms and conditions of employment give workers little choice but to stand up for their livelihood. Alongside those legitimate grievances, there is also the threat to the universal service obligation, which is the obligation to adopt a “one price goes anywhere” principle of affordable postal services. Under the minimum service requirements enshrined in the Postal Services Act 2011, Royal Mail must deliver letters to every address in the UK six days a week, at a uniform price, and parcels five days a week.
As we have heard, in May 2022 the Royal Mail Group, which is now International Distributions Services, announced record-breaking profits for 2021 of £758 million and then promptly paid £567 million to its shareholders. Then, just weeks afterwards, Royal Mail announced significant losses, alleging that it was losing over £1 million a day. That led to the concerning approach to the Government to request a reduction of the universal service obligation, from an obligation of letter delivery six days a week to an obligation of only five days a week, between Monday and Friday. It is clear that there are serious questions to be asked about what is going on at Royal Mail. Shareholders are given huge dividends, yet soon afterwards up to 10,000 postal workers’ jobs and the six-day-a-week delivery service are at risk. It just does not stack up.
Now we have the prospect of a takeover of Royal Mail by Vesa Equity, which is also concerning for the future of the universal service obligation. There is a serious risk that Vesa Equity would sell off Royal Mail UK but retain control of General Logistics Systems—the international parcel subsidiary—which continues to be profitable and has previously helped to cross-subsidise the UK business.
Reducing the universal service obligation would be hugely detrimental to the scope and quality of the UK’s universal postal service, which is heavily relied on by businesses and consumers. It would also lead to the loss of thousands of permanent Royal Mail jobs around the country, exacerbating regional inequalities.
Let me reiterate the points that have been made this week. The Government must guarantee that the universal service obligation is secure for the future and will continue to be provided by Royal Mail, because people value their local postal workers. Just look at the covid-19 pandemic, when postal workers put their lives on the line to deliver letters and parcels, as well as providing vital contact for vulnerable residents, many of whom were isolated, elderly or lived on their own. We must focus on the value of our postal service—particularly its relationships and its reach across the UK—and not just on the cost of individual transactions.
This key community contribution must be protected, and I agree with my hon. Friend the Member for Jarrow that Royal Mail must not adopt the gig economy employment model of low wages and insecure contracts. I therefore ask the Minister whether there needs to be an inquiry into whether the mismanagement of Royal Mail will undermine the postal universal service obligation, and I look forward to his response to the debate.
David Johnston (Wantage) (Con)
It is a pleasure to serve under you today, Ms Ali. I have spoken about Royal Mail quite a bit in this place—I have secured my own Westminster Hall debate about it, I have had meetings with HQ and arranged meetings for constituents with HQ, and I have visited a delivery office—so I am not planning to make a long speech. However, each time I have spoken about Royal Mail, I have been clear that our individual postmen and women work very hard. There is a problem in the management of the service. I totally accept the changing nature of the service, with us sending far fewer letters now and sending many more parcels, and I also accept that there have been staffing issues.
Nevertheless, I started getting complaints about Royal Mail in August 2020, and I am afraid that I have had more complaints about it than about any other organisation. They are sometimes about things such as cards and magazine subscriptions not arriving for several weeks, but the much more serious ones are about bank cards, insurance renewals and hospital appointments that are missed. My constituents feel very much that they are being fobbed off by Royal Mail. One of them said, “I feel like they’re saying, ‘We’re trying, but it’s not our fault.’” That is the reason why I have spoken so much about Royal Mail in the House, held my own debate about it and so on. I have experienced the issues myself, living in Didcot. Recently, constituents such as Keith McEwen and Sarah Trinder have written to me about things that have taken three or three and a half weeks to arrive.
Specifically on the universal service obligation, I may be the only one in the room who is agnostic about whether there is a five-day or a six-day delivery. The reason is that my constituents are complaining of not getting things for two or three weeks. I asked my constituents on Facebook what they would think if Royal Mail moved from six-day to five-day delivery. I did not get a huge number of responses to that poll, but 72% said they would be quite happy with a five-day service if—this is what they kept saying in their comments—that service was reliable. If they actually got the five-day service, they would be relaxed about not having the Saturday service.
I totally hear what the Minister says about the six days, but I am personally agnostic about that. My constituents are most concerned about ensuring that delivery is reliable, however many days it happens on, that they get things in a timely fashion and that they do not miss serious things they should have taken part in or done, because that can sometimes have a financial or a health cost. However many days the Government agree should be delivered on, I would be grateful if the Minister could outline how we will drive up the reliability of the service, because we cannot keep seeing stamp price increases for a service that is not being delivered.
Matt Rodda (Reading East) (Lab)
It is a pleasure to serve under your chairmanship, Ms Ali. I thank my hon. Friend the Member for Jarrow (Kate Osborne) for her work in securing today’s important debate, and I commend other Members for their contributions. Most of all, I thank our postal service and postal workers for their incredible work for our community over what have been three very difficult years during the pandemic and then carrying on into the post-pandemic period. I want to make three points about the importance of the Saturday service—first, about its importance to older and isolated people; secondly, about its importance to business and, in particular, small and local businesses; and thirdly, about the wider principle and continuing importance of universality in postal services.
On the importance of the daily postal service for older people, I have had a number of conversations with residents in my community and particularly with older people who do not rely on electronic forms of communication and who still like physical forms of communication. It is important to bear that in mind; although the wider world has shifted somewhat towards email, many people still prefer to have things in a physical form. I also want to draw Members’ attention to the importance, particularly to lonely or isolated people, of receiving items such as Christmas cards or birthday cards in the post. This truly vital service in our community helps people feel loved and valued. We can imagine the feelings of joy when a grandparent receives a card from their grandchild on their birthday. We should preserve something so important, and of course the Saturday service is an important part of that.
I also want to focus on the importance to businesses. Some excellent points were made earlier about the importance of delivering literature, bank cards and other important business information by post. There is another side to that, however, which has not yet been raised in the debate, and that is the importance of postal deliveries as a form of advertising for local small businesses. For many small and medium-sized enterprises in my area and other parts of the country, being able to deliver something through the post, such as a flyer, a card, a magazine or some other marketing literature, can be extremely important. Removing the Saturday service would effectively take away one sixth of the opportunity to reach the public. It is also important to consider that, for some types of business, it may be particularly important to have literature go out on a Saturday morning. Other colleagues have talked about information about appointments, bank cards or other business or important personal information being delivered by post.
I am very aware of time, and I know that other colleagues want to get in, but I want to offer my support for the principle of universality. I am glad that the Government have indicated that they want it to continue. I am concerned about the way the dispute is developing, the problems with the service with Royal Mail at the moment, and possible changes to ownership. I ask the Minister to reassure the House about his and the Government’s ongoing commitment to universality.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
It is a pleasure to serve under your chairmanship, Ms Ali. As the MP for the largest constituency in the UK outside the highlands of Scotland, I very much welcome this debate, secured by the hon. Member for Jarrow (Kate Osborne). As others have said, the Royal Mail and the universal service obligation are vital in rural areas such as mine. Rural areas also tend to have a higher age demographic and still suffer from poor broadband services. I have constituents who are still on dial-up—that is often not recognised. I also have constituents who live in notspots who cannot use mobile phones. It is still vital that they have an opportunity to receive postal communications, and that should be six days a week, so I welcome what the Minister has said on that and I very much hope that there will be no pushing back.
I pay huge tribute to the posties in my constituency for the job they do. If any Members present have tried to deliver addressed mail to constituents, they will know what a challenge it is. Having met many posties on visits to delivery offices, I did not find them to be a group of militant trade unionists; I found them to be people who took great pride in the job they did. In fact, they often feel embarrassed or ashamed about the way the service is currently being delivered. One person at the Lockerbie postal delivery office told me that they were really disappointed when they did not meet their targets for the first time. They were not out to cause disruption; they want to deliver a first-class service. For them to do that, we need to see the same commitment from the management of Royal Mail.
The market is changing, but the example I would cite is that of Amazon, which recently chose to bring a delivery vehicle into parts of my constituency where deliveries would have previously been made by Royal Mail. That was a commercial decision; as we saw with the recent closure of the Amazon facility near Greenock, the company makes commercial decisions, so it might well decide tomorrow that it is not going to provide a van service into Dumfriesshire. If we allow Royal Mail to be diminished, what kind of service will be provided to constituents? That is something I have concerns about, along with all the issues that Members have raised about private delivery firms. When the House of Commons used a private delivery firm, it managed to deliver my parliamentary mail on more than one occasion to residential addresses, rather than to my office.
I know that the Minister is concerned about the nature of the Post Office, because although it recently declared that it was entirely separate from Royal Mail, that is not really the case. The two are interconnected, and when CJ Lang and Son—the operator of the SPAR convenience store network in Scotland—pulled out of a number of post offices, it cited parcel issues and the return of parcels to post offices.
In concluding, I want to make the further point that I am concerned about the sustainability of the post office network and Royal Mail across my constituency and others. These two assets are incredibly valuable to constituents, and the Government should be doing everything they can to sustain them.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to follow my comrade, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell). I have to say that I agreed with many of his remarks, which will no doubt concern him greatly. I also congratulate my good friend, the hon. Member for Jarrow (Kate Osborne), on securing this important debate.
It would be remiss of me not to mention my family connections to Royal Mail: my late grandfather worked for it for many decades, and two uncles also worked for it. They cared passionately about the Royal Mail service when they worked for it, as do the workers in the Govan and Hillington delivery offices—when I have met them on the picket line during the present dispute, it is clear just how much they care. As I have said to the Scottish secretary of the Communication Workers Union, its members in Govan and Hillington are a credit to themselves and their trade union, because they care about the public. They know the communities and they look after vulnerable members of those communities, looking in on them and making sure they are okay. They care about the service and the key principles around that service.
Royal Mail staff have no interest in turning the service into a gig economy-style parcel courier, but Royal Mail is introducing insecure contracts and lower pay into the service to try to turn Royal Mail into just that sort of gig economy parcel courier service, which should be of deep concern, for many of the reasons that the right hon. Member mentioned. My concern is that Royal Mail’s direction of travel will leave communities, businesses, customers and workers worse off.
In discussing the universal service obligation, we need to ask questions about the financial mismanagement of Royal Mail, which I believe puts the universal obligation at risk. Questions need to be asked about how a company can make profits of £758 million, as reported in March last year, which would easily qualify for any excess profits tax, and, six months later, that profit has been turned into a loss of £57 million. The company is almost Carillionesque in its management approach. As someone who was part of the Carillion inquiry, I can see similar themes in Royal Mail’s management approach in terms of profits, sending money to its shareholders, running down the service and then making losses. The comparison is not unfair.
The end of Saturday deliveries would have a harmful effect on other industries, such as the publishing sector, as has been mentioned. It would result in millions of pounds in losses from people cancelling magazine subscriptions, for example, and reduce advertising revenues. It would also lead to thousands of decent Royal Mail jobs being lost around these islands, and it runs completely counter to the often stated levelling-up agenda that we hear about so often.
In closing, I hope the Minister will talk about the proposed takeover by Vesa Equity, which has been allowed to increase its stake in Royal Mail; we have had no explanation about that as yet. I have a very real concern that it wants to break up the service and break Royal Mail apart. If that is the case, the company will hear from many hon. Members, and not just myself, as to why that should be opposed and obstructed.
Ian Lavery (Wansbeck) (Lab)
It is a pleasure to serve under your chairmanship, Ms Ali. I congratulate my hon. Friend the Member for Jarrow (Kate Osborne) on securing this important and timely debate.
As many hon. Members have said, we have to look at the current situation with Royal Mail regarding the USO and at the Royal Mail going forward. Not only have I been on the picket lines, but I have visited people in the workplace, and it is a fact that those individuals are more determined to take the Royal Mail forward as a viable, modern organisation than the people who are actually managing it. The people managing the company at the moment are taking fortunes from the business, and I will mention Simon Thompson personally. The fact that the salary of the chief executive is 23 times more than the median wage of a Royal Mail worker is scandalous, and nobody here would agree with paying him that amount.
Simon Thompson’s objective is to destroy the Royal Mail and sell it off to Vesa Equity, which now owns 23% or 24% of Royal Mail. That fact was unearthed by the CWU during early discussions about the pay award. Behind the scenes the management is trying to destroy Royal Mail in order to sell it off and to make fortunes, and then those people will move on to other industries in order to do the same. On the other side, we have people who are losing wages and who are prepared to fight for a viable, modern Royal Mail service, looking after the public in the future. That is the difference.
There are 115,000 posties on strike: the key workers we all clapped during the pandemic for the wonderful job they had done; the men and women who trundled the streets with the covid packs, day in, day out; the only individuals lots of people saw on a daily basis, in the morning—always with a smile, always with a whistle. These are the individuals who are fighting for what we all need, which is a modern Royal Mail, not a gig economy, courier-type service where we hive off the letters and use self-employed white van drivers, who themselves work extremely hard. We do not want to replace what we have with that type of employment; I would have thought those days had gone.
The profits been mentioned a number of times. What organisation could make £750 million-odd in profit, give £570 million-odd to shareholders and then not have any money to pay the people who provide the service, and then, just months after, say it is losing £1 million a day? It is ludicrous. There needs to be an inquiry into how the management are deliberately destroying Royal Mail, both financially and structurally. Until we get that, we have to support Royal Mail and the workers on the picket line to make sure we get a fair resolution and a decent, modern Royal Mail service into the future.
Clive Efford (Eltham) (Lab)
Ms Ali, after 26 years of being in the House, it is a great pleasure to speak in a debate with you in the Chair for the first time. I congratulate my hon. Friend the Member for Jarrow (Kate Osborne) on securing this important debate.
I will start by doing something I did not expect to do, which is to agree with the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), who gave an excellent speech, including his complimentary comments about the people who work in the postal service. What I find sad about the Government is that whenever they talk about public sector workers, they always talk about them as if they are the enemy, but when I talk to public sector workers, I hear that they are concerned about their conditions making it difficult for them to be able to provide the service they are providing. That is true of the postal workers, when I talk to them about their industrial action and defending the universal service obligation.
The situation we are in right now was predicted at the time of privatisation—incidentally, Royal Mail has been in private hands for 10 years, and here we are with this standard of service. What a disgrace! It was predicted that sooner or later, its management would want to cherry-pick the service. The more profitable bits would be hived off, and the universal service obligation would come under threat.
Post covid, many more people are working from home. I recently led a debate in this Chamber regarding my local train service, because the Government are saying, “We are cutting the local train service because more people are working from home.” Well, if more people are working from home, it follows that more people will be reliant on their post; they will want those important documents that cannot be emailed, which other Members have described, to come through the post. If the Government’s argument for cutting trains applies to the postal service as well, it will be more important to defend the universal service obligation, not less.
I have raised the issue of casualisation in the past. We had casual labour employed to deliver the local post a number of years ago, and we found undelivered bags of mail in the Quaggy river, which runs through my constituency. More importantly, the employers could not identify the workers they had employed to deliver those bags of mail. They had no identification—no way of following up who they were. Those people had rifled through the post, and what they did not have time to open they just dumped in the river—no come back, no follow-up. Is that the sort of casualisation that we want to see—people being hired to deliver the post for Royal Mail because they have a van? It is a service that people rely on and we should not be dumbing it down.
I have one or two questions for the Minister. Royal Mail announced record profits last May of £758 million. It paid out £567 million to shareholders and buy-back schemes. Within six months of International Distributions Services becoming Royal Mail’s parent company, it announced it was losing £1 million a day and was going to cut 10,000 workers. What questions did the Government ask of IDS when it announced it was losing £1 million a day so soon after it had made record profits of £758 million? Given that the losses were within just six months, surely that should have raised some alarm bells within the Government.
What attitude do the Government take to the dumbing down of the workforce, the introduction of the laws of the gig economy—rather than relying on the dedicated workforce that we have—and Royal Mail’s undermining of the workforce? IDS, the parent company, says it is making losses, but apparently boasts to potential investors—this was reported in The Telegraph—that it has a £1.7 million investment war chest to put into the company. How can it be saying one thing to one audience and another to the other?
I know the Minister will sympathise with my final point. Apparently, Mr Daniel Křetínský has links to the gas operator Gazprom. What assurances do we have that we are not supporting Putin’s illegal invasion of Ukraine by the back door? Is there a national security risk from his involvement with Royal Mail?
Rushanara Ali (in the Chair)
Order. Can the hon. Member tell the House whether he has informed the Member he mentioned that he would refer to him in this debate?
Clive Efford
I am not talking about a Member of the House. Daniel Křetínský is the owner of Vesa Equity Investment.
Clive Efford
Finally, will the Minister undertake to defend the universal service obligation and not dumb it down in any way?
Zarah Sultana (Coventry South) (Lab)
It is a pleasure to serve under your chairship, Ms Ali. I congratulate my hon. Friend the Member for Jarrow (Kate Osborne) on securing this important debate. £567 million: that is the amount Royal Mail bosses paid to shareholders in 2021, and it came from record-breaking profits that totalled £758 million. But just a few months after the company recorded these eye-watering figures, its bosses claimed that the business was bleeding money and went on to threaten the jobs of up to 10,000 posties.
That is the background to this dispute on Royal Mail: bosses on million-pound salaries taking what they can get, ransacking a 500-year-old part of our national infrastructure while seeking to cut jobs, shred workers’ terms and conditions, and worsen a service that our communities rely on. I stand in full solidarity with members of the Communication Workers Union at Royal Mail in Coventry and across the country who have been on strike to protect their jobs and rights, and for a fair pay rise. I also want to put on record my disgust at the union-busting tactics that Royal Mail management have engaged in, with about 100 spurious allegations levelled against CWU reps, whose only crime in the bosses’ eyes is standing up for themselves and their colleagues by going on strike.
I want to address the point about strikes head on, because they impact all our constituents. Of course they do; it is in their nature. Strikes are disruptive, just as they are on the railways or in the NHS. But when living costs soar, when everything is going up except wages, and when asking nicely does not get results, workers simply have no choice but to go on strike. The real problem is not workers going on strike; it is the rigged economy that the Tories have built that forces workers to go on strike, and I think that point is catching on. We only have to look at the polls across the board. The public back the strikers, from posties and nurses to teachers and rail workers. Even if they are not taking industrial action, people know that striking workers want what they want for themselves: fair pay, decent jobs and affordable bills. They want basic rights. They are not asking for much, and they have had enough of losing out while people at the top have got richer and richer.
This is not new in the Royal Mail. Since the Tory-Lib Dem coalition privatised the service in 2013, going beyond what even Thatcher attempted, shareholders have been paid more than £2 billion in dividends and buy-backs, and bosses’ salaries have skyrocketed, but services have declined and workers’ wages have stagnated. Even the privatisation was a total rip-off, with big banks undervaluing the company to a tune of billions and letting big shareholders make huge fortunes as they watched the value of their shares rocket, only to sell up once share prices stabilised. Now, after nearly a decade of privatisation, Royal Mail bosses want to end the universal service obligation, risking a service that caters to 32 million households and that has existed for more than 500 years, and replacing it with yet another gig economy company.
I want to end with a message to the Government: do not let Royal Mail be broken up; do not let mismanagement and greed destroy a service that our communities rely on, nor watch from the sidelines as our posties are made redundant, and their terms and conditions shredded. Ultimately, my message to the Minister and the Government is: end the failed experiment of privatisation and bring Royal Mail back into public ownership.
Sam Tarry (Ilford South) (Lab)
It is an honour to speak under your chairship, Ms Ali. I want to start by expressing my solidarity with members of the Communication Workers Union who are taking industrial action for better pay and conditions, and with the Romford amalgamated branch, whose members in the main sorting office are almost a stone’s throw from my office in Ilford. I give a particular shoutout to someone who has been on the picket lines leading the charge: Bill Bishopp, who I like to call the branch secretary. Employees like them are heroes who have worked throughout the pandemic. They have made Royal Mail one of our most beloved national institutions, which, as many Members have said today, our nation—the length and breadth of Britain—relies on. Any future must be one in which its workforce is valued, treated fairly, and paid fairly.
I also pay tribute to my hon. Friend the Member for Jarrow (Kate Osborne), who has many years’ experience working with Royal Mail, for securing this debate.
In the last year, as my hon. Friend the Member for Wansbeck (Ian Lavery) has said, Royal Mail Group announced record-breaking profits of £758 million, £567 million of which was promptly paid out to shareholders. The crazy thing is that just a few weeks later, it announced significant losses, alleging it was losing over £1 million a day. At that point, shortly after, Royal Mail went cap in hand to the Government to plead poverty and ask for permission to reduce its commitments to the universal service obligation from six days to five. That is a wholesale levelling down of Royal Mail, and it has severely jeopardised the viability of the universal service obligation—the cornerstone of an effective and modern postal service.
Royal Mail has consistently failed to hit its quality of service targets in the past five years. As many Members have said, the obligation provides a crucial safety net to everyone in the UK as we all have a fundamental right to request access to a minimum set of communications services at affordable prices. It ensures that no matter where we are, Royal Mail must provide a six-days-a-week, one-price-goes-anywhere postal service. If we lose that universal postal service, countless homes in the UK will lose that safety net and find themselves at the mercy of a broken and imbalanced privatised system, as we have already seen happening over the past decade, that allows providers to cherry-pick the cheap, easy-to-reach customers and ignore those in more remote and less accessible communities.
The Government cannot keep letting Royal Mail off the hook in its consistent failures and must hold it to account. People in this country have to be able to rely on their postal service. As many Members have said today, vital medical letters and urgent bills need to arrive on time. At some point, someone has to say, “Enough is enough.” The company is fundamentally run as a dreadful business, but it need not be run in that way. Surely breaking the USO is in direct conflict with the levelling-up agenda. If the Government claim to champion that in every part of the UK, concerns about Royal Mail demonstrate a levelling down across many parts of our country—perhaps not in my constituency, but, as many Members have said today, in rural constituencies that really rely on the services.
At the same time as Royal Mail sought to tear the USO to shreds, its senior leadership used that mismanagement of funds to justify cutting 10,000 postal jobs and offering a derisory pay rise of only 2%. As we all know, inflation is spiralling up massively on a weekly basis. All the while, Royal Mail leadership retained and recruited agency staff, while engaging in disgraceful fire and rehire tactics to introduce owner drivers, who are on 20% less pay and insecure contracts—effectively turning a national institution into another gig economy employer. It is no wonder that the CWU, which represents 120,000 postal workers, has taken to the picket lines to oppose that disgraceful attack.
Will the Minister condemn those disgraceful employment practices, which almost guarantee a race to the bottom on pay and conditions? If so, what measures will the Government take to ensure that quality, secure jobs in the sector are not replaced by insecure and poorly paid positions? This vital service has been privatised and is run for profit, but I wonder whether the Government might consider something more radical. According to We Own It research, we would save £171 million a year by bringing Royal Mail into public ownership, which is enough to open 342 new Crown post offices, with post banks. Some 68% of the public would love Royal Mail to be brought into public ownership. Doing so would be both popular and practical.
The public have been sending letters by Royal Mail for more than half a millennium. For isolated, vulnerable and elderly people, a friendly face on the doorstep can be a lifeline. One local postie in Ilford, Michelle, told me:
“I’m very proud of the work I do; it’s not just about delivering Mail and parcels. I love keeping an eye out for those who are vulnerable or lonely and having a chat with them to brighten their day. Keeping the spirit of the postman alive for the children as many posties have before me. I’m the eyes and ears for missing pets etc. we are more than just a courier service. We keep the community going…We will not give up on providing the service the public deserves and has known for 500 years.”
If a postie can say that, the Government must consider what on earth is going on, and how we fix it.
Ian Byrne (Liverpool, West Derby) (Lab)
It is a pleasure to serve under your chairmanship, Ms Ali. I thank my hon. Friend the Member for Jarrow (Kate Osborne) for securing the debate.
Postal workers are the lifeblood of our communities, and they kept us afloat during the covid-19 pandemic. We clapped their selflessness and dedication. For many, they were, and are, the only source of human contact. They stepped up to the plate when we needed them most. It has been a pleasure to stand on picket lines in Liverpool, West Derby and witness the respect with which they are regarded in my community.
Royal Mail represents one of the clearest examples of the decimation caused by privatising a public service. It was established over 500 years ago, and the universal service obligation is now on the verge of being lost forever. That follows the service’s 2012 privatisation by the coalition Government. Royal Mail was profitable at the time of privatisation: in the year prior to its sale it reported a 60% increase in its pre-tax annual profits to £324 million. Privatisation was an awful decision.
Fast-forwarding to today, Royal Mail has paid out billions in shareholder dividends and millions in payments to chief executive officers, while hiking up stamp prices, cutting workers’ wages in real terms and failing to meet Ofcom targets for service provision. There is now an attempt by Royal Mail bosses to get the Government to change the USO, by asking to move to a minimum five-day delivery service for letters from the current minimum six-day service. While West Derby postal workers have been forced to food banks because of low pay, and 10,000 postal workers have been cut from the service in the middle of the cost of living crisis, CEO Simon Thompson received a £140,000 bonus. Royal Mail has also introduced owner drivers on lower pay and insecure contracts, which signals a move to a gig economy employment model. Workers on the picket line are terrified of that move; they are terrified for the people in their communities—not just for their own jobs.
Make no mistake: if Royal Mail’s senior leadership is allowed to continue with those plans, and with its mismanagement of the organisation’s funds, Royal Mail as we know it will simply no longer exist. It will no longer provide a service to over 32 million addresses daily. After 500 years of service, it will be broken up and turned into another gig economy parcel courier, leaving communities, businesses, customers and workers worse off. Will the Minister respond to the calls of the Opposition and the CWU and launch an urgent inquiry into the leadership of the Royal Mail, given that it is a key part of the UK’s national infrastructure and appears to have been brought to the brink of collapse due to the gross mismanagement of its business by the current management?
It is no surprise that the majority of voters want Royal Mail to be brought back into public ownership. Research from the University of Greenwich tells us that buying back Royal Mail would cost £4.6 billion, but £171 million would be saved every year, to be reinvested into the postal service. Does the Minister want to stand by and allow one of the most cherished foundation stones of our nation, the Royal Mail, to be lost forever? If the Government shared the CWU’s vision, the service could be at the forefront of the regeneration of our communities. Instead, it is becoming a hollowed-out and gutted UK version of some of the awful international companies in this sector that treat their workforce as fodder. We must be better than that. Those loyal postal workers deserve the Minister’s action and support. They and our nation deserve nothing less.
Beth Winter (Cynon Valley) (Lab)
Royal Mail and the universal service obligation force us to ask questions about public services, public ownership, privatisation, and the current industrial disputes about pay and terms and conditions in workplaces. Royal Mail is a public service, and the USO, with the six-day delivery service, stamps on it the fact that it is and should be a service for everyone, but it is now operated in the private sector.
The management are operating to maximise their profits and slash services, and are disbursing those profits in dividends to private shareholders. They have paid so much in dividends that they now claim they cannot pay staff and need to significantly reduce their terms and conditions. Other comrades here today have already exposed the grotesque profits that have been accrued—billions in the past decade—and paid out in dividends to shareholders.
At the same time, Royal Mail is pleading poverty and saying that it cannot pay workers a fair and decent wage. It is offering a below-inflation pay offer, which is absolutely unacceptable and abhorrent. That is why we have had 18 days of industrial action. I want to express my full support for and solidarity with those who have been forced—it is not a choice—to take strike action. I have spent many days with members in the delivery office and on the picket line in Aberaman. I congratulate them, because they have had to do this in very difficult circumstances. The CWU branch rep in south Wales, Jason Richards, is doing some outstanding work.
I recently wrote to the Secretary of State about Royal Mail’s financial management of the business and its approach to meeting the USO for postal deliveries, and I have not received a reply. I would like to know why not.
I am mindful of time, but I want to pose some questions to the Minister. First, how can it be that the IDS board led the company to the brink of financial disaster just six months after reporting profits? How is that acceptable, given that it has been entrusted to run what is still a vital public service? If the Royal Mail chair and the CEO can tell The Daily Telegraph that the company has built up a £1.7 billion war chest to invest in the business, how can it then tell the CWU that it has debt and liquidity issues? What does the Department think of that financial management, and is the Minister taking steps to launch an inquiry, as others have already asked?
Can the Government explain the reasoning behind allowing a private equity firm, Vesa Equity, to acquire a controlling stake in the UK’s primary postal service provider, potentially leading to a full takeover and likely asset stripping of this critical national infrastructure? Does the proposed move to a five-day delivery service not demonstrate that the Royal Mail’s commitment to the USO is now broken, and that it wants to change a public service into the truly private, profit-led and cash-cow enterprise it would prefer Royal Mail to be?
My final question is this. With nearly 70% of the public in support of bringing Royal Mail back into public ownership, have the Government considered that option and how it could boost economic growth and opportunity, while providing secure, well-paid jobs for workers in everybody’s communities, rather than the current proposal to cut jobs and shift to a gig economy of self-employment? I will finish by reiterating my message of solidarity. I give thanks to CWU—I know that we have officials in the Public Gallery—which provides such a vital link within our communities. They truly do deserve a better deal. Solidarity to them.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Ms Ali. I start by congratulating my hon. Friend the Member for Jarrow (Kate Osborne) on securing this important and timely debate. I cannot think of many Members who have had the experience of Royal Mail that she has had. I thank her for her 25 years of service and her relentless advocacy for those who rely on the USO and wider services.
Posties are indeed a lifeline. It is clear from the contributions across the House today that there is a great strength of feeling in all parts of the Chamber. There is a strength of feeling on the importance of the management and delivery from Royal Mail of our USO for communities across our country, and on the need to safeguard the USO, which so many across the country rely on. Notwithstanding the commercial challenges that Royal Mail faces, there is a problem with the management that has come through very clearly in this debate. Complaints are not being effectively dealt with and customers are paying more for less.
I thank the postal workers in my constituency of Feltham and Heston and the CWU, not just in my constituency but around the country—they are represented in the Public Gallery today. Royal Mail is a prized and loved institution. Royal Mail staff are essential workers. Whether it was delivering test and trace kits or being a point of contact for those isolating, they helped to get us through the pandemic. It is Royal Mail’s dedicated workers who deliver the universal service obligation, delivering to every address in the UK, six days a week, at a uniform affordable price.
Almost all of us still rely on letters, and as my hon. Friend the Member for Reading East (Matt Rodda) has said so clearly, the service is much more important for those who are vulnerable. The quality of service also matters. Citizens Advice has been calling out the quality of service in recent years—an issue over which the management of Royal Mail need to be held to account. Royal Mail has failed to hit a single quarterly target for over two years. Letter delays can result in consumer harm, such as missing hospital appointments, fines for missing court dates and weakened credit scores following missed bills.
The pandemic highlighted the importance of having a robust, well-functioning and affordable delivery service that can reach all parts of the country. It also demonstrated the value of postal workers connecting communities and delivering vital services to those in need. That is why Labour is committed to the universal service obligation as the company’s central mission. The next Labour Government will want to ensure that the USO is secure for the future and continues to be provided by Royal Mail in a way that is affordable and accessible to all users, and financially sustainable for the long term. We will also strongly oppose any attempts, whether by the Conservatives in the future or by the leadership of Royal Mail Group, to weaken or abandon the USO.
I am glad to have seen the Minister’s response to a recent written parliamentary question, as well as the debate earlier this week. I will be listening closely to what he says today. As we have heard, Royal Mail has asked the Department for Business, Energy and Industrial Strategy to cut Saturday letter deliveries from the USO. We are extremely concerned about that and about the potential consequences, including for example for businesses with magazine subscriptions where Saturday deliveries form part of the delivery model.
Any industrial challenge needs to be resolved in a way that is pro-business and pro-worker, which is why we will support Royal Mail workers in their efforts to secure the long-term health and future of the service, by supporting mutually agreed changes to modernise the service. We all recognise the challenges that Royal Mail faces—whether it is the rising cost of doing business, much of which is due to the Tories’ mismanagement of the economy and 13 years of failure, or growing competition in the parcel business—but it is wrong to see it as a service that is not changing or modernising, as some people have sought to characterise it. It has changed, and it is changing.
The Labour party will work with Royal Mail and the unions to expand the role of postal workers, adding social value to our communities and introducing innovative products and services to support the levelling up and growth of our local and regional economies. The Labour party stands against the break-up of Royal Mail and will oppose any attempt to turn this vital service into a gig economy employer through a takeover. Labour will review all aspects of the postal sector to ensure that the USO is continued and strengthened, including the delivery of parcels. This includes assessing the options for improving Royal Mail, taking into account the proposals from the CWU.
Let us be in no doubt that we all want to see a successful, long-term future for Royal Mail, in which the Government have to play their part, too. However, decisions by management are rightly under scrutiny, with questions remaining over the decision of International Distributions Services to give out over £400 million in dividends and £167 million in share buybacks last year, despite knowing about the post-pandemic mail traffic forecasts. The company is now seeing a financial loss in the first half of this financial year.
The Secretary of State has yet to respond to the letter from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) in November, which outlined his concerns about recent developments and the increased shareholding in International Distribution Services by Vesa Equity, a company with links to Russia, which the Government have allowed to acquire a controlling stake. The management’s handling of the current industrial dispute is also under question—not just from colleagues today, but from former CEO Rico Back.
It has also been concerning to hear reports of Royal Mail intimidating striking workers. If that is correct, even in a small number of cases, it is absolutely unacceptable. I ask the Minister to put on the record his and the Government’s condemnation of any intimidation. Frankly, Royal Mail’s essential workers, who I know take such pride in their jobs, should not have felt driven to take industrial action to get a fairer deal. It is positive that the CWU and Royal Mail are now in a period of intensive negotiations, and the country will expect a fair negotiated deal and an end to the dispute.
We have had a very important debate today, and at a very significant time. But it is clear that, at a time like this, the Government’s vision and policy for the future of Royal Mail really matter. Will the Minister confirm that the Government will not change the statutory minimum requirements of the universal postal service, which are set out in the Postal Services Act 2011? What recent discussions has he had with Ofcom regarding Royal Mail’s performance against the USO and its performance targets? What concerns has he raised, including about its sudden and rapid reversal of fortunes? What discussions has the Minister had with the CWU about its proposals, and what discussions has he had with Royal Mail about how it has handled the management of the organisation and the assessment of its strategy for the future of the business, for workers and for our constituents? As my hon. Friend the Member for Eltham (Clive Efford) said, this is a service that people rely on and we should not be dumbing it down.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
It is a pleasure to speak with you in the Chair, Ms Ali. I congratulate the hon. Member for Jarrow (Kate Osborne) on securing this really important debate about Royal Mail and the future of the universal postal service, and I very much appreciate her experience and expertise, and what she is able to add to this very important debate. She talked about the changes at the top of Royal Mail, as well as the changes in personnel in my role. I pay tribute to my predecessors, not least for their unwavering commitment to Royal Mail workers, who do such a fine job, and to a universal postal service, which I will come to in a second. Today’s debate is the second I have had on this matter in this Chamber this week, which shows how important the subject is to our constituents and to fellow Members of Parliament. I agree with the way the hon. Lady described the service; it is a lifeline for many throughout our communities.
I thank all right hon. and hon. Members for their important contributions. As they know, 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. Most people rely on at least some important information to be delivered by post. Cards and letters remain a special way to keep in touch with loved ones, and, as the hon. Member for Luton South (Rachel Hopkins) said, it was hugely important that covid tests were distributed properly during the pandemic.
In the last financial year, all postal operators delivered around 3.8 billion parcels across the UK and Royal Mail delivered around 8 billion addressed letters. My hon. Friend the Member for Wantage (David Johnston) is right that the volume of letters delivered has dropped to 8 billion; it was around double that in 2013, at the time of privatisation. Nevertheless, the importance of the postal service in keeping people connected was never more apparent than during the covid pandemic. We are hugely grateful to the delivery workers, who worked exceptionally hard to deliver letters and parcels in those difficult circumstances.
My right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) and the hon. Member for Glasgow South West (Chris Stephens) talked about the pride that postal workers feel in their jobs. I absolutely concur with that. My father was a milkman in our local community. The hon. Member for Glasgow South West talked about how vulnerable members of the community are looked after by postal workers, and that was the experience of my father in our little local community as well, so I fully recognise the importance of the service.
Post offices also play a unique and vital role in the UK’s postal system. We are committed to ensuring that we keep a minimum of 11,500 branches throughout the UK, with 99% of the population being within three miles of a post office. That is why we have invested £2.5 billion in the post office network over the last 10 years.
The hon. Member for Eltham (Clive Efford) seemed to think that Government Members view public service workers as enemies. I gently say to him that I take exception to that. We all have friends and relatives who proudly work in the public service. My mum was a social worker who worked in the public sector all her life, and she did a fantastic job, so I do not recognise the hon. Gentleman’s characterisation, and I do not recognise in my colleagues, either.
Clive Efford
My simple question is: how will the Minister vote on the Bill on Monday?
Kevin Hollinrake
We will have a good opportunity to debate the Bill on Monday, so I do not want to get dragged into that right now.
Kevin Hollinrake
As the Minister concerned, clearly I will vote in favour, as the hon. Gentleman would imagine, but let us have a good debate about that on Monday. I spoke to one of the hon. Gentleman’s colleagues, the Chair of the Business, Energy and Industrial Strategy Committee, the hon. Member for Bristol North West (Darren Jones), today, and he said he was very supportive of a minimum service level, so we should not draw battle lines on this issue simply on party political grounds. But perhaps we should have a go at debating that on Monday.
The importance of the universal postal service is a key element of today’s debate, as mentioned by many hon. Members, including my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale, my hon. Friend the Member for Wimbledon (Stephen Hammond), and the hon. Members for Reading East (Matt Rodda), for Luton South, for Wansbeck (Ian Lavery) and for Ilford South (Sam Tarry). Our objective continues to be the provision of 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-a-week, one-price-goes-anywhere, universal service remains at the heart of the regulatory regime, and why Ofcom has a primary duty to secure its provision.
My hon. Friend the Member for Wimbledon asked what I am doing to make sure that Ofcom meets its responsibilities. I met the head of Ofcom and other members and pointed out very clearly its role as a regulator, and in ensuring that this service continues.
To be completely clear, the Government currently have no plans to change the statutory minimum requirements of the universal postal service, which are set out in the Postal Services Act 2011.
Chris Stephens
I take what the Minister says in good faith, but could he maybe just respond to some of our concerns about the actions of Royal Mail and the proposed takeover from Vesa Equity? While the Government are saying that they want to keep the six-day service, Royal Mail management and some of its shareholders seem to be trying to do something completely different.
Kevin Hollinrake
The hon. Gentleman raises an important point. I will come on to the Vesa point later, but set out in the legislation, from back in 2011, there is a clear and transparent process for how any changes to the universal postal service should be considered. That was coalition legislation. Any such change would need to be made through secondary legislation and be agreed by Parliament. We would also expect Ofcom to consult with all stakeholders. Our position has been very clear in my meetings with Royal Mail and Ofcom: we think that the six-day service should continue.
Ofcom has a monitoring regime in place to identify any risks or threats to the universal postal service. Since 2012, it has published an annual report setting out key data and trends in the postal sector, the impact of the changing market dynamics on UK postal services, and Royal Mail’s performance. Royal Mail is clearly facing some challenges, particularly given the long-term decline in letter volumes and the currently challenging economic backdrop, but I have yet to receive any convincing case for a need to change to meet users’ needs and to ensure the financial sustainability of the universal postal service.
A number of hon. Members, including my hon. Friend the Member for Wimbledon and the hon. Member for Jarrow, raised a point about large business owners and the impact on large businesses, such as those that produce magazines and the like, and how they would be impacted. We would fully expect their needs to be taken into account, in terms of user needs’ surveys. The hon. Member for Reading East talked about the impact on small and medium-sized enterprises—something that is very important to me personally—and making sure that they can get marketing messages out to communities across their target areas.
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.
Hon. Members have understandably raised concerns about Royal Mail’s service delivery performance. The hon. Member for Liverpool, West Derby (Ian Byrne) and my hon. Friend the Member for Wimbledon both raised that point. It is true that the business has faced increasing pressures over the last few years, not least the coronavirus pandemic and the industrial relations dispute with the Communication Workers Union. There have been impacts on the business and the users of postal services. It is regrettable to see postal services disrupted due to strike action and to see the impact that that is having on consumers, businesses and other users.
We are not involved in the negotiations, given that Royal Mail is a private company. However, we are monitoring the dispute closely and have urged Royal Mail and the CWU to reach a resolution as soon as possible. I know there are ACAS talks right now and there will be no further strikes until 20 January, until the talks have concluded. I very much hope that the talks will prove successful.
Ian Lavery
Before the Minister concludes, will he comment on the fact that Royal Mail is openly bragging that it has £1.7 billion in a war chest for union-busting and investing in the company?
Kevin Hollinrake
I will come on to that important point.
Among other things, Royal Mail is required by Ofcom regulation to achieve certain performance targets in the delivery of its universal service products to ensure that consumers receive an adequate level of service. The regulator has powers to investigate and to take enforcement action, as it did when it fined Royal Mail £1.5 million in 2020 for missing its 2018-19 first class national delivery target.
Ofcom does accept that covid-19 has had a continued impact on Royal Mail’s service delivery, which is why Ofcom did not fine it for its regulatory obligations breaches last year. However, in that decision, Ofcom also noted its concerns, which should concern us all, about Royal Mail’s performance in the early part of the year, which Ofcom felt fell well short of where it should be. Ofcom believes that Royal Mail has had plenty of time to learn lessons from the pandemic, which will mean that it is unlikely to consider the factors considered for 2021-22 as exceptional and beyond its control in the future. Royal Mail has committed to restoring quality of service as soon as possible, and I expect Ofcom to keep a close eye on its performance over the remainder of this year.
Points about renationalisation were raised by the hon. Members for Glasgow East (David Linden), Coventry South (Zarah Sultana) and Glasgow South West and others. While Royal Mail undoubtedly faces challenges, the Government are clear that renationalising the business is not the answer. One of the primary reasons for the sale was to enable Royal Mail to access the capital it needs to invest. When Royal Mail was independently reviewed in 2008 for the last Labour Government, we were told that it was underfunded and had not kept pace; it was 40% less efficient than equivalents around the world.
Financial performance was raised by the hon. Member for Wansbeck and the hon. Member for Cynon Valley (Beth Winter). I think the hon. Member for Cynon Valley said that she had not had a response to her letter. I have asked my officials to look into that urgently, along with the letter from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), to ensure that they get responses quickly; I apologise for that.
In terms of profitability, it is important to look at Royal Mail in isolation, rather than at IDS itself. Different figures have been bandied about. Look at profitability this year: as Members have mentioned, in the same period in the previous year it made a profit of £235 million —this year, it made a loss of £220 million. To answer hon. Members’ questions, in its regulatory notice in the Regulatory News Service—in which the information must be accurate—it blames that on the strikes, the lack of productivity improvements that were set out in the “Pathway to Change” document and the macro-economic climate.
The hon. Member for Wansbeck described the £1.7 billion invested as a war chest to fight unions; I do not think that that is an accurate statement. I saw it reported in one of the papers—I think it stated that it was £1.7 billion to invest across the businesses. That does not mean that it uses that war chest to simply fight industrial action, and I would not expect that to happen. We are keen to ensure that the dispute is resolved, and amicably.
Royal Mail has invested more than £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. Importantly, that investment is transforming how Royal Mail operates, with parcel automation up from 12% in 2019 to 65% now. There is certainly room for improvement in Royal Mail’s service delivery. Ofcom’s analysis tells us that most consumers continue to be satisfied with postal services, but we should continue to challenge Royal Mail on its performance.
As I have set out, the Government remain committed to securing a financially sustainable and efficient universal postal service for users throughout the UK that is accessible and affordable. There are currently no plans to change the minimum requirements of the service.
Kate Osborne
I thank all hon. and right hon. Members for speaking in the debate. I am not surprised to hear the Minister say that he will be voting for the legislation on Monday; I will certainly not be voting in favour of it, because it is a fundamental attack on workers and human rights. I thank the Minister for his responses, and I mostly want to thank all postal workers—my old colleagues—for continuing to deliver, literally, in the face of the vile attacks that they are receiving from the management of Royal Mail.
As the Minister has heard, there are so many different areas in which Royal Mail’s senior management is failing. We need an inquiry into the gross mismanagement of Royal Mail; that is something that I have asked for before, and I ask for it again. The millions of pounds given to shareholders and CEOs in profit should be put back into the business, and Royal Mail—a service that we all rely on—should be renationalised. Royal Mail needs to resolve the dispute with the CWU, and I send solidarity to all members and workers—I know that they are in talks this week. It must row back from threatening to sack tens of thousands of workers; these job losses will impact on not only those losing their jobs but the workers who are left behind to pick up the slack and, of course, it will impact on us all as users of Royal Mail.
Motion lapsed (Standing Order No. 10(6)).