Lord Whitty
Main Page: Lord Whitty (Labour - Life peer)Postal Services Bill
Lord Whitty Excerpts
Lord Whitty
“( ) No disposal of the Crown’s interest in a Post Office company may be made before—
(a) the Secretary of State commissions and publishes an independent assessment of—(i) the current financial position of that Post Office company; and(ii) the projected financial position of that Post Office company in the subsequent reporting period; and(b) the Post Office company is profitable for two successive financial years, excluding payments from government for services of general social and economic interest.”
Lord Whitty
My Lords, I support the other amendments in the group. We move on to the future of Post Office Ltd. After debating the potential conditions for a minority mutual share in Royal Mail, we are now talking about the possibility of the complete mutualisation of Post Office Ltd, or sub-companies thereof.
In many respects, that is an entirely different proposition, because more than 90 per cent of the outlets of the post office network are already owned by small businesses. It is not clear how the Government intend to mutualise the overall arrangements. I take for my text the useful publication, Securing the Post Office Network in the Digital Age, produced by the noble Baroness’s department. It refers in general terms to the Government’s belief that,
“a mutually-owned Post Office Ltd could be ideally suited for the economic and social role that the Post Office network provides”.
The report also talks about the possibility of basing the mutual on a combination of employees, communities and franchisees—sub-postmistresses and sub-postmasters. However, it is clear from the text that the Government do not have a clue how this will be delivered and are therefore, rightly, seeking advice from Co-operatives UK and other bodies that are experienced in mutualisation.
Given the premise of the Bill—as noble Lords will know, my basic instincts are in roughly the same territory as that of my noble friend Lord Clarke of Hampstead—and given that Royal Mail is to be privatised, and Post Office Ltd and Royal Mail are to be separated, we should explore the prospect of potential mutualisation in that area. However, in order to achieve a mutualised Post Office Ltd, we need to ensure that there is a viable, sustainable and profitable post office network. Although the Government in this document and in other pronouncements have indicated their commitment to that, it is built on somewhat feeble ground.
I quote from the final paragraph of the report, which states:
“We are committed to the future of the Post Office network. It is uniquely important to communities across the country but is on a worrying trajectory of decline. As we have set out in this policy statement, we are dedicated to turning the Post Office around. This will involve a major refresh of the network and its products, and the Post Office turning the size of its network to its advantage”.
That, as an introduction to a prospectus, is not hugely upbeat. It suggests that there are a number of question marks over the future of the network, some of which we have touched on in earlier debates, and some of which arise from other aspects of government policy.
The Government claim that they are committed to preserving the current network, more or less. However, there are at least four aspects of government policy that undermine that commitment. The Post Office potentially has a fantastic national network and is a very good front office of government in almost every community. It can provide a range of financial and other services and can be a major part of the logistical network for post, parcels and digital services. However, at the moment there are a number of question marks over it. Only last week, for example, we saw a continuation of the regrettable trend, admittedly started under the previous Government, of taking away government business from the post office network; I refer to the decision of the DWP to take a major benefits contract away from the Post Office. That is another blow to the sustainability of the network resulting directly from a government decision.
As we heard in the debate the other night, there is an almost incomprehensible reluctance on the part of the Government to commit themselves to a long-term inter-business agreement between Royal Mail and the post office network within the new structure. As I said then, I am not committed to the IBA being in exactly the form it is now. Clearly there are legal difficulties, to which the Government have referred. However, unless there is a stable relationship between Royal Mail and the post office network, another substantial part of the potential income of the network will begin to look extraordinarily uncertain.
In addition, we have had the rather lukewarm response of the Government to proposals for the Post Office to extend its services. In particular, I am surprised that the Government so precipitously rejected what we were working towards under the previous Government—and which was greatly supported by my former organisation, Consumer Focus—namely, the extension of Post Office financial services, and in particular the provision of those services to people who are outside the main banking system. We have seen positive moves towards being able to use the Post Office in the mainstream banking system: RBS recently signed up to that. Now one can access the majority of major high street banks via the Post Office. The problem with the financial services market is that roughly 20 per cent of the population are excluded from it; they do not have basic banking facilities and do not have access, physically and in terms of credit, to those financial services. The Post Office could very simply bridge that gap at a point that would be close to most families.
I am surprised that the Government have abandoned that proposition. There have been more encouraging words about providing additional services, but it is very strange that they have closed the door on the provision of a banking service. Another Commonwealth country, New Zealand, has made a recent and spectacular success of using the Post Office as a banking system throughout the country. We should look at such examples for this country.
Therefore, there are dark clouds over the future of the network. Noble Lords will recognise that that means there is some uncertainty as to whether we could successfully mutualise the network and Post Office Ltd. In the same document, the Government indicated that for a mutualised Post Office Ltd to be successful, it must be able to build on solid foundations, and that mutualisation will be an option only if the network is financially viable. It is not specified how it can be made viable, how the assessment will be made or how the conditions of financial viability will be determined.
The amendment proposes an independent assessment of the financial position of Post Office Ltd, including its future commercial viability. It proposes also that, before we moved to mutualisation, whatever that may mean, we would need to have seen two years of profitable operation of post office Ltd prior to the decision in principle being taken. That is exclusive of the subsidy which the Government have for the next few years committed to the post pffice network. There is no commitment beyond that, and therefore any assessment of financial viability would have to be on the basis of excluding the government subsidy. Both the assessment of the network’s viability and of the proven profitability of that network would have to be established before mutualisation could go ahead.
I am not opposed to the mutualisation of Post Office Ltd. I can see many major advantages, not least to consumers and vulnerable consumers, particularly in rural areas and the outer suburbs. I am not at all opposed to the Government’s concept, given the premise of the Bill. However, in order for it to work we need to have established, effectively and robustly, that there is a viable company and a viable network.
I hope that the amendment would provide the means whereby we made that assessment, and would make it clear in the Bill that such an assessment needed to be made before we took the next step. I beg to move.
Lord Whitty
My Lords, I am grateful to the noble Baroness for some of the reassurances she has given, which were the basis for tabling the amendments in the first place. I am also grateful to all noble Lords who have indicated that they too need some reassurance to the effect that mutualisation will not be pursued until there is a clear and robust Post Office Ltd or Post Office network if not absolutely in place, at least in prospect. I thank particularly my noble friend Lord Young for the complementary amendments which, in addition to the assessments that I have proposed, would require a report to Parliament and a parliamentary process. I shall come back to that in a moment.
I say to the noble Baroness and the noble Lord, Lord Razzall, that I am not attempting to slow the process down. I think that it will take time to get to a position whereby we are able to mutualise, and some of what she said indicates that. Nor am I am not trying to restrict flexibility because I recognise that a range of different options is available, some of which may not be a single option because different parts of the network may be dealt with differently. As I say, I am not trying to be restrictive in this respect. However, there are some deep worries. As the noble Lord, Lord Cameron, indicated, there are particular worries in rural areas. The other areas that are particularly an issue are what I would call the remoter suburbs, those areas between the inner city and Surrey or Cheshire, where again the post office is an important focus and social element for those who are somewhat cut off from the economic and social mainstream. There are substantial parts of the country where the post office is a major institution, and there are anxieties. That has been demonstrated through reactions to the reduction in the number of post offices over the past few years. As my noble friend Lady Donaghy indicated, it has become a social and political issue.
The Minister said that we do not want to institute a parliamentary veto here. I think that when the Bill is considered in another place, she will find that Members of Parliament from all political parties may not want to regard it as a veto, but they will want a pretty strong reassurance that the time is right for mutualisation to take place, and therefore a report to Parliament along the lines proposed in the amendments tabled by my noble friend Lord Young is necessary.
Obviously I will not press the amendment tonight, but the problem is that the noble Baroness has to be completely convincing. The noble Lord, Lord Razzall, slightly mysteriously referred to a package that he hopes Ministers will come forward with. I have some inkling about that in relation to the Ministers in the noble Baroness’s department, Ed Davey and Vince Cable, and, indeed, the noble Baroness herself. I am not attempting to split the coalition—not tonight anyway—but there is a different sort of split between Ministers in BIS, who I think are genuinely committed to the future of the Royal Mail and the post office network, and other departments which are not prepared to make any sacrifices in relation to the network. As the noble Lord, Lord Cameron, and other noble Lords said, we have just had yet another example—we had some significant ones under the previous Government—of a department taking a silo view of what is in its most cost-effective interest helping to destroy the interests of government and society as a whole, particularly in rural and underprivileged areas. I think the split is not between Ministers or parties but between different Whitehall departments. We need to get some coherence there in parallel with setting up the terms of the mutualisation. We need greater clarity that the Government as a whole are behind the objective of making the post office network work. Only at that point can we clearly be reassured that this mutualisation is likely to work.
I think the main points have registered with Ministers, and I suspect these debates will go on in another place. Ministers in the noble Baroness’s department will need to ensure that the network that they envisage over the next few years will be robust, will be sustainable for a long period of time and will meet the social and economic needs of a large proportion of our population. If they can do that, godspeed to mutualisation. I beg leave to withdraw the amendment.
Lord Whitty
“Counter access to postal, government and other services
(1) For the purpose of ensuring continued universal counter access through a Post Office company to services specified in subsection (2), the location and geographical distribution of counter access points shall be governed by the following access criteria—
(a) 99.7% of the total population shall be located no more than 3 miles from a counter access point;(b) 93.2% of the total population shall be located no more than 1 mile from a counter access point;(c) 99.8% of the total population in deprived urban areas shall be located no more than 1 mile from a counter access point;(d) 99.1% of the total population in urban areas shall be located no more than 1 mile from a counter access point;(e) 99.2% of the total population in rural areas shall be located no more than 3 miles from a counter access point; and (f) in each postcode district, 95% of the population in that postcode district shall be located within 6 miles of a counter access point.(2) The access criteria specified in subsection (1) relate to, but are not limited to, the provision of counter access to the following services—
(a) postal collection and delivery services as specified by the universal postal service order;(b) postal service products;(c) processing social benefit and tax credit payments;(d) processing of national identity and licensing scheme applications;(e) payment facilities for essential utility services;(f) cash and banking facilities; and(g) government savings instruments.(3) Within six months of the commencement of this Act, the Secretary of State shall determine and publish—
(a) the process by which the number of counter access points to services specified in subsection (2) and access criteria specified in subsection (1) shall be reviewed;(b) the frequency at which the number of counter access points to services specified in subsection (2) and access criteria specified in subsection (1) shall be reviewed.(4) In undertaking a review described in subsection (3), the Secretary of State shall consult—
(a) the Post Office company;(b) bodies able to represent the interests of consumers using counter access to the services outlined in subsection (2); and(c) such other persons as the Secretary of State considers it appropriate to consult.(5) Following a review established under subsections (3) and (4), the Secretary of State may by order amend the access criteria specified in subsection (1).
(6) The power in subsection (5) to amend the access criteria in subsection (1) shall be subject to the procedure in section (Super-affirmative procedure).”
Lord Whitty
My Lords, we have reached this amendment slightly quicker than I had thought we would. Although the amendment looks complicated, it is, in essence, an amendment to probe how the Government intend to fulfil the commitment made in the paper to which I previously referred—and to which the noble Baroness referred twice—that they will maintain a network of approximately the present size. The noble Baroness stated that even more precisely in her reply to my noble friend Lord Lea.
I have tabled the amendment from the perspective that my previous organisation, Consumer Focus, and its predecessor, Postwatch, have been through two alleged rationalisations of the post office network, the first of which was based on no objective criteria at all. It worked from where sub-postmasters were finding it difficult to maintain a post office, were retiring, or had some other reason for not wanting to continue. The second round of rationalisation worked on substantial and clear issues of access that were specified in crude distance terms, but nevertheless gave rationality to the assessment of whether one post office or another should change.
I must say, having inherited this situation at three-quarters of the way through, that I found it difficult for a consumer organisation to be forced to choose between the post offices in any particular town. Nevertheless, the criteria against which we operated— access to post offices among different populations, distance to travel to a post office, and so on—are reproduced in the paper from which I quoted earlier, but which I unfortunately gave to Hansard for verification. However, the document includes a table that sets out the current criteria.
My concerns are twofold. Those criteria would arithmetically allow for a network that is significantly smaller, particularly in towns and suburbs, than the current network, and I therefore need to square the assurance given by the Government that they are looking for and are in effect subsidising for the next few years a network at its current size, with the fact that theoretically, using the same criteria, they could reduce it to a size of between 7,000 and 8,000. I hope that the Government reaffirm their commitment to retaining a network of the current size.
The calculations in proposed new subsection (1) in the amendment, according to my former colleagues in Consumer Focus—I did not do the arithmetic—would sustain a network of roughly the present size. In other words, the first four criteria are considerably more stringent than those used in the previous round of rationalisation and specified in the Government’s document on the future of the network. This would not mean that every post office would need to remain open. There would obviously be temporary closures and what the Post Office somewhat euphemistically calls business-as-usual closures. There would also be movements of sites within particular areas. However, one would arrive at roughly the same number of post offices, were these criteria to be followed.
It would be interesting to know whether the Government intend to tighten up the criteria or to add different criteria that would produce figures similar to those in the amendment, or whether their commitment to the current size of the network is irrespective of particular criteria because they envisage that the moves they claim to be making to improve the volume of post offices’ business—to sustain and inculcate a different sense of purpose through mutualisation—will mean that we will end up with a network of roughly the current size.
I see that the noble Lord, Lord Skelmersdale, is once more in his place. When we were discussing the IBA, he raised a pertinent question as to whether any failure to commit to the IBA—and, I would add, to direct other government work to the post office network; an earlier debate today demonstrated that we were moving away from that—threatens the Government’s commitment to the size of the network. There is a circle to be squared, and I am not entirely clear how the Government intend to square it.
One option would be to reassure consumers, sub-postmasters and the staff of the post office network that the criteria would be tighter. Another option would be a more detailed way of reassessing those criteria. In fact, proposed new subsections (3) to (6) in the amendment would allow the Government systematically to assess the criteria of access and the nature of services provided.
Another dimension that has been mentioned is that part of Post Office Ltd’s plan is to reduce the range of services provided in some post offices. There was the experiment of Post Office essentials outlets that provided a reduced range of services. Some have worked and some have not. That is not necessarily entirely consistent with the government commitment to maintain the network broadly as it is, but it may mean that different gradations of post office outlets appear within the total. It would also be useful to know about that.
Although I do not expect the Government to accept the amendment, it gives them options in adopting criteria that would sustain more or less the present network or having a process whereby they redefined the criteria for access and the services provided. It would be useful to know what the Government’s strategy was in this respect. Obviously, we take great heart from the reassurance that the present network will remain in place, but the question of how that will happen and how we square that with certain other developments that were referred to earlier remains. I will be interested to hear the Minister’s comments. I beg to move.
Lord Young of Norwood Green
My Lords, I speak to my noble friend Lord Whitty’s “omnibus” amendment and to Amendments 22C and 22E.
They all seek to introduce new clauses to strengthen access criteria to prevent the further erosion of the post office network, to ensure the provision of a wide range of services at all post office branches, and to ensure a fair distribution of the Post Office's proposed new main post offices.
Amendment 22A writes into the Bill the current level of access to post offices in the UK. As part of the 2007 changes to the post office network that included an investment of £1.7 billion and incorporated the Network Change Programme, resulting in the closure of 2,500 post offices, the Government introduced a series of distance-based access criteria. These remain applicable but are not included in Royal Mail's licence and are not set out in law. The minimum access criteria introduced by the previous Government state that 99 per cent of the total UK population should be within three miles of their nearest post office; 90 per cent of the population should be within one mile; 99 per cent of the total population in deprived urban areas across the UK should be within one mile; 95 per cent of the total urban population across the UK should be within one mile; 95 per cent of the total rural population across the UK should be within three miles; and 95 per cent of the population of the postcode district should be within six miles.
Lord Whitty
My Lords, I am extremely grateful to the noble Baroness for giving such a detailed answer, including a good number of commitments, which are reassuring. I think she overcharacterised this amendment as too rigid. It does not say that every post office should have the whole range of services, nor does it say that the access criteria can never be altered. By this amendment, I was trying to establish whether the commitment to the 11,500 post offices is an absolute commitment or whether there is some headroom in the criteria. The noble Baroness has made it absolutely clear on several occasions tonight that the commitment is to a network of 11,500, although that is not to say that one or two might change location and quite a few might change the services that they offer and the sub-postmaster or mistress who runs them might change. You need that flexibility.
My remaining anxiety is that, although I recognise that different levels of post office would have different gradations of services, we have to allow some flexibility and some change over time as the market develops, particularly in the growth businesses. It is also important that there is some criterion for the distance to main post offices which cover the whole range of services. I think the noble Baroness said that in addition to the general criteria in relation to post office outlets, there would be some criteria about the maximum distance that people were from a main post office, or a post office—different terms are used—which offered pretty much the whole range of services. If she said that, that is more reassurance.
We have a number of things on the record, including the Government’s very clear commitment to the size of the network. I hope that within that there is not a serious diminution in the range of services which a large part of the network offers, and I certainly hope that the distance to main post offices is taken up. Subject to that, I shall be happy to withdraw the amendment at this stage.