Postal Services Bill

Alan Reid Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Weir]

Indeed. Let me quote one of the myths in the leaflet:

“Growth in parcels from online shopping will outweigh falls in letter volumes”.

The response states:

“The parcels market is much smaller than the letters market and has been fully liberalised since 1981, making it highly competitive.”

It might be highly competitive, but many carriers will not deliver to remote and rural areas, particularly to Scottish islands, except at immense cost. There is a real danger in going down the route of privatising postal services.

[Mr Alan Reid (Argyll and Bute) (LD)]

The Bill mentions, in clause 30:

“At least one delivery of letters every Monday to Saturday…to the home or premises of every individual…in the United Kingdom”

at a uniform price. What better guarantee than that does the hon. Gentleman want?

[Mr Weir]

I remind the hon. Gentleman that in the summer his Business Secretary said that the service might go down to five days a week, so he recognises that it might be reduced. He also said that European regulations rightly ask only for a five day a week service. Any privatised service will inevitably want to cut costs and there will be pressure on the Government to allow that.

--- Later in debate ---

[Mr Alan Reid (Argyll and Bute) (LD)]

I represent a constituency with many small, remote communities, including many islands. Clearly, Royal Mail and the Post Office are vitally important to that constituency. I have to admit that when privatisation was first mooted, I certainly questioned it. However, I am now convinced that it is the only way forward because of the state of the finances of both Royal Mail and the Government more widely. Thus, private capital provides the only way of investing in the modern plant and machinery that Royal Mail so desperately needs. Given the huge mountain of debts that the previous Government left behind, there is simply no alternative.

[Jim Shannon (Strangford) (DUP)]

One of the proposals involves the returned letter centre in Belfast, which employs 26 people. It is the most efficient returned letter centre in the United Kingdom, so the proposed changes cannot be to do with efficiency. As for savings, where are the savings in such a move?

[Mr Reid]

I am afraid that I do not know the details of what is happening to Royal Mail services in Belfast, so I shall have to pass on that, but the Minister has an hour and a half in which to find out the answer.

As I was saying, there simply is no alternative to private capital. Royal Mail is in a very difficult position. As other Members have pointed out, there is competition not just from other mail companies, but from other means of communication such as the internet and e-mail. As we heard from the right hon. Member for Wolverhampton South East (Mr McFadden), the former postal services Minister, the last Government concluded that private capital was required. There are clearly differences of opinion on whether there should still be a majority Government stake or whether the Government should have the power to sell off more than half the business, but I think that we should give the Government the power to sell off as much of the business as they consider necessary. We should bear in mind that the Bill does not mandate the full privatisation of Royal Mail, but merely gives the Government that power. I believe that we should give them the flexibility that they require in these difficult economic times.

[Mr Anderson]

Would the hon. Gentleman apply the same logic to other parts of the public sector such as the health service or defence? If the logic hangs together when applied to this service, why should it not do so when applied to those other services?

--- Later in debate ---

[Mr Reid]

Those are completely different examples. If the question arose in the hon. Gentleman’s constituency of allocating public funds to a scanner for his local hospital, to the troops in Afghanistan or to a sorting machine for his local sorting office, I think a survey would establish that the scanner and better equipment for the troops in Afghanistan would rank high in the pecking order. Because Royal Mail is operating in a competitive market, it is important for it to secure private sector expertise. The health service is a national health service for the whole country, which is why it should be in the public sector.

It was the last Government who introduced competition to the mail business in their Postal Services Act 2000. However, the structure that they created allowed private companies to cherry-pick the most profitable parts of the business, while leaving Royal Mail to deal with the expensive part—delivering to remote parts of the country. Royal Mail is now suffering as a result of the unfair competition created by the last Government’s regime, and I am pleased that the Bill will allow Ofcom to remove much of that unfair competition.

Under the last Government, all that we saw was worsening service. Opposition Members seem to have forgotten that. It was not the fault of the postal workers, but the fault of the competition regime that the Government had created. Mail is now delivered much later in the day than it used to be, Sunday collections have been abolished, and stamp prices rise every year by far more than the rate of inflation. Worst of all, thousands of post offices have closed. I was delighted by the announcement today of a vital £1.3 billion of new funds for the Post Office.

[Chris Evans]

Will the hon. Gentleman give way?

[Mr Reid]

No. I am afraid that I have already taken the two interventions that I am allowed.

The Post Office is extremely important, and it is also important for the whole Government to back it. Given that it has branches throughout the country, it is in an ideal position to deliver Government services. I hope that we shall not see from this Government some of the silo thinking that we saw from the last Government. I am thinking particularly of the Department for Work and Pensions. Owing to the way in which government is structured in Departments, there is often an incentive for silo thinking, and for looking only at an individual Department’s budget and not the wider budget. I can understand the pressures on the DWP to cut costs and therefore perhaps to allow services such as the payment of pensions and benefits to go to a competitor that does not have as wide a network as Royal Mail and the Post Office, but I hope that those pressures will be resisted, that the whole Government will back the Post Office, and that in particular when considering the contract for the payment of benefit cheques, the DWP will continue to give it to the Post Office. Any other private sector competitor does not have the same widespread network.

The key test of whether I would support the Bill was always going to be, “Does it protect the universal service obligation?” The Bill clearly passes that test. I intervened on the hon. Member for Angus (Mr Weir), because he clearly had not read the Bill. I draw his attention to clause 28(1), which states:

“OFCOM must carry out their functions in relation to postal services in a way that they consider will secure the provision of a universal postal service”,

and to subsection (2), which states:

“the power of OFCOM to impose access or other regulatory conditions is subject to the duty imposed by subsection (1).”

That is the USO.

[Mr Weir]

Will the hon. Gentleman give way?

[Mr Reid]

Very briefly, because I will not get an extra minute, as the hon. Gentleman did following my intervention on him.

[Mr Weir]

The point I was making is that we have a six-day service now, that the Bill guarantees only a five-day service and that the Business Secretary seemed to think that that was sufficient.

[Mr Reid]

The Bill requires

“At least one delivery of letters every Monday to Saturday—

(a) to the home or premises of every individual or other person in the United Kingdom”.

The hon. Gentleman is getting confused between the Bill and the European directive. The directive guarantees only five days. What the Secretary of State has been saying is that he already has the power under the European Communities Act 1972 to reduce the service to five days, by order, but he has no intention of using it because the Bill guarantees six days. I encourage the hon. Gentleman to read clause 30.

I am also delighted that clause 44 allows Ofcom to impose a duty on other mail operators to make a contribution towards the cost of the USO if that is necessary. I have been campaigning on that for many years. The previous Government resisted it and I am delighted that this Government have put that in the Bill.

I support the Bill and congratulate the Secretary of State on bringing it forward. I believe that it covers all angles and that it will deliver sustainable postal services in all parts of the country.