Postal Services Bill

Viscount Thurso Excerpts

Wednesday 12th January 2011 Commons Chamber

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

Is my hon. Friend aware that there are many examples of private sector companies splitting to become separate entities and that, in almost every case, a shareholders’ agreement between them has set the terms until they have been able to operate independently? Is that not precisely what the new clause would do, and is it not simply commercial good practice, which should be commended to the Minister?

[Bob Russell]

I am extremely grateful to my hon. Friend. If he is called to speak in the debate, I hope he will elaborate on that important and valuable point, of which I was not aware. I am sure he is correct—he would not have said it otherwise—so if it is acceptable for private sector companies to split but still have a legally binding agreement, why cannot we have that in this case? I thank him for making that point.

Royal Mail needs to be free from Government interference. It must become more dynamic—I think that that reinforces my point—and more competitive, as the market for postal services has liberalised. Mr Richard Hooper, who has reported to this Government and the previous Government, has said that Royal Mail’s profit is considerably lower than that of other national postal authorities and a lot lower than that of the private carriers. Of course, one reason for that is the subsidised delivery of private mail. Whether or not that is an accurate assessment, the argument in favour of privatising Royal Mail has at its core the desire for the business to grow and become more profitable. As with all private businesses that operate in strongly competitive markets, Royal Mail will undoubtedly want to use the new commercial freedoms it has been given. Indeed, a dynamic Canadian business woman was appointed as chief executive precisely to ensure that Royal Mail can get the best of starts as a wholly commercial entity.

--- Later in debate ---

[John Thurso]

First, I apologise to the House for having been absent for two of the contributions to this debate. I had an urgent meeting with a constituent who had come rather a long way, from the far north, to be here.

I want to speak in support of my hon. Friend the Member for Colchester (Bob Russell)—notwithstanding the fact that I am not his flatmate, which might not be the best way to support him judging by what we heard earlier. I will confine my remarks to why I believe it is absolutely crucial that there should be an agreement. However, I should briefly preface those comments by reminding the House that in the previous Parliament I was my party’s Business, Innovation and Skills spokesman. For a considerable time, discussions on the then Government’s privatisation of the Royal Mail were in hand and I had discussions with representatives of the post offices and the unions and the Royal Mail.

One view I came to is slightly different from an opinion that has been expressed by many Members today. I felt that the post offices had been the poor relation inside the Royal Mail Group, and that the fact that they did not have their own board or their own chairman meant that very often got the second-best outcome. I therefore put in my party’s proposals that whatever happened—whether the Royal Mail was privatised, left as a mutual or left as public—the post office group had to be a separate entity with its own chair and board, so that it could argue its case effectively and have a real future.

I always saw a strong future for post offices. Many of the reasons for that have been alluded to today: the opportunity for new financial products; the possibility of a post bank, which I remain convinced is a particularly good way of taking post offices forward; and the ability to develop post offices in a range of areas, and especially for them to be in many instances the first line of contact between the citizen and the state. A numerate, literate, intelligent and articulate person—which is what our postmasters and postmistresses are—can help people at the very start of the process of making a claim and so forth, and can help people avoid many of the problems that are encountered when they can talk only to a call centre.

I always saw a strong possibility of post offices developing, but I felt that that required them to be a separate organisation. However, I also thought that, in order to ensure that there is a reasonable degree of stability in the business, it was essential that there was a business agreement for a suitable time to enable the transformation to take place.

[Dr Whiteford]

I am very sympathetic to the argument for increasing the range of services and products available in post offices, and I think that if that had been done in the past it would have assisted matters greatly, but does the hon. Gentleman share my concern that some of the local post office branches, and in particular the outreach services provided in vans or in mobile facilities, are wholly unsuited to this sort of provision?

[John Thurso]

I share the hon. Lady’s concern, but I do not believe that is insurmountable. In my constituency, I have probably some of the remotest post offices in the United Kingdom. In the villages of Mey and Dunnet we had the first pilot of a van out of Wick, so I have been through all of that. There are problems. There is a post office at Buldoo, which is a mile from Dounreay. Those in charge of the post office are the fourth generation of the family to run it. Happily, they have a croft to sustain them, because they have only 14 customers; there are 14 regular customers and the odd tourist. Clearly, that kind of operation would have a long way to go to be sustainable in the way we are discussing.

A great many products can be delivered online, but often a human interface is required. Given the breadth and depth of the post office network and the number of people involved in it, it can provide that human element that nowadays is so sadly lacking in so much of the interface between Government and the citizen. That is where the opportunity lies.

Let me now explain why I think the new clause of my hon. Friend the Member for Colchester is so necessary. There are many examples in the private sector of businesses that have decided to split, or of joint ventures where those involved have decided to go their own way, or of hotel companies where those in charge have decided to sell the property to a property company but remain the managers. In every one of those examples, there is an agreement. It might be a shareholders’ agreement, or it might be a contract between the two parties, but there is some form of agreement. One aspect of such an agreement that is nearly always in place, and usually for a period of five, seven or sometimes 10 years, is a non-compete clause. If there is not a non-compete clause, it is a fair given that at some point—maybe after one or two years—one side or the other will say, “You know that contract we signed? I reckon we can do a bit better. Let’s have a go at this.”

The Royal Mail needs such a measure just as much as the post offices do. If any body can come anywhere close to challenging the Royal Mail’s universal service obligation last-mileability, it is the post office network. That may be unlikely, but it is a possibility, and why bother with allowing a possibility? It is inconceivable that, in an initial public offering or a trade sale, any investor would make an investment in the Royal Mail if there was not a clear contract. Therefore, I would almost guarantee that there will be a contract, so I do not understand the reticence of the Under-Secretary about giving a few measly guarantees as to length and content. I cannot see how that would be other than simply sound commercial good sense by the Business Department, in order to enable both organisations to operate effectively and have a clear path for the future, and for there to be a clear understanding. It is on that one commercial ground that I think the arguments put forward are compelling, which is why, unless there is an even more compelling argument from the Front Bench, I shall support my hon. Friend the Member for Colchester.

[Chris Evans (Islwyn) (Lab/Co-op)]

I support the new clause. I noticed that the hon. Member for Colchester (Bob Russell) was temporarily sitting on this side of the House a few moments ago. I thought he had crossed the Floor. If he wants to make it a permanent arrangement, I am sure we will find space for him on these Benches.