Baroness Burt of Solihull
Main Page: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Nia Griffith
I shall take your advice on the matter, Madam Deputy Speaker; I believe that the hon. Lady should stick to the amendments on the Order Paper.
This first group of amendments concerns the sell-off of Royal Mail and the splitting up of the Royal Mail Group into a privately owned postal service and a publicly owned network of post office counters. It is against that background that we should consider Lords amendment 1, which requires that when the Secretary of State lays before Parliament a report on the disposal of a Royal Mail company, it should include
“information about the expected commercial relationship…between the Royal Mail company in question and any Post Office company”.
We genuinely welcome the inclusion of such information in the report, but no one should be under any illusion that this in any way constitutes an inter-business agreement between Royal Mail and the post office network. Hooper recommended in his report that there should be a long-term agreement between Royal Mail and Post Office Ltd, and the National Federation of SubPostmasters has asked for an IBA of a minimum of 10 years. We have repeatedly called on the Government, at all stages of the Bill, to include an inter-business agreement in the legislation, and have tabled amendments to that effect.
One third of Post Office Ltd’s revenue comes from Royal Mail. Without that revenue, Post Office Ltd would be unable to keep many post offices open. With the greatest of respect to Moya Greene, the current chief executive officer of Royal Mail, who has talked about a privatised Royal Mail continuing to use the post office network, it is no good simply having fine words. Those fine words need to be translated into a proper bankable contract—a proper agreement. Other countries manage to put agreements into their legislation, but the real difficulty in this case is an intense obstinacy on the part of the Government, who have set themselves against enshrining any protection for the post office network in legislation.
A profit-hungry privatised Royal Mail will be looking to cut costs and maximise profits. That could result in Royal Mail drawing up an agreement for part or even all of its services with providers other than the post office network, such as a supermarket chain or a high street store. A privatised Royal Mail may well wish to continue to have some sort of agreement with Post Office Ltd, but that agreement could be for a much reduced service from that which the Post Office currently provides. It could involve just a small proportion of the current network of Post Office branches. That could give rise to the surreal spectacle of some post offices being places where people could hand over their parcels or register their letters, with other post offices not offering postal services. It sounds a bit like a children’s riddle—“When is a post office not a post office?”—but it would be no joking matter for our post office network or for the public, who want easy access to postal services, if such services were available at only some of the current post office branches.
Lorely Burt
I welcome the Lords amendments that we are considering today. They are an indication of the way in which the Government and the Opposition can work together, because the Government have obviously listened to the constructive suggestions made by Members on both sides of the House. There is a great deal of consensus; I believe that the amendments went through the other place without a Division. That goes to show just how well things can work when everyone is minded to make that happen.
On the subject of shares going to employees, when I wrongly tried to intervene on the hon. Member for Llanelli (Nia Griffith), I was going to point out that it is not 100% of the company that is being sold off to private interests: it is actually 90%, and 10% will go to the employees. The benefits to those employees will be huge. The Bill recognises the importance of the work of the conscientious postman or woman who keeps the post coming through the letterbox six days a week, come rain or shine, and the importance of the work force to the success of the company. The proposals will offer real benefits to the employees.
I greatly welcome the fact that the pension plan members will be protected and that the subsuming of the pension plan is being brought forward. That will give tremendous reassurance to prospective pensioners in Royal Mail. Perhaps most importantly, and despite the disagreement of the Opposition, we are securing the future of the company. The worst thing would be for the Government to do nothing, which would allow Royal Mail to decline and fall. It is an unfortunate fact that, under the previous Government, 65,000 Royal Mail employees lost their jobs and 7,000 post offices were closed. The future of the post office network is now secure. I also greatly welcome the proposal for a vote before mutualisation. That will put in place important protections.
I should like to ask my hon. Friend the Minister a few questions. Does he think that I have understated the benefits for employees? Can he think of any others? Can he give me an assurance that the universal service obligation will be properly protected? Has he had any discussions with representatives of the Communication Workers Union, and, if so, what do they think about the proposals?
Jack Dromey (Birmingham, Erdington) (Lab)
It is important that, when we come to the House, we should reflect the feelings of our constituents. I should therefore like to tell two stories. First, just before Christmas, I visited the local postal sorting office at Sutton New road. I spoke to each of the excellent men and women there. They told me how they had worked there for 10, 15 or 20 years. Some had worked there for 25 years. They work in all weathers to provide an outstanding service to the people of north Birmingham. They felt bitter about what they regard as a betrayal of their loyal service to the country.
Secondly, I want to tell a story not so much about a local post office as about a local entrepreneur who wants to reopen a post office. We have in Perry Common a community well served by the Witton Lodge community association. That community has backed an individual who now runs the local grocery shop—it used to be a sub-post office—and he wants to reopen that post office. Through me, he has approached both the Post Office and the Government for support, only to have it declined. If I may, I will return to that matter at the conclusion of my remarks.
Jack Dromey
To develop our post office network, it is necessary to be imaginative and creative. Sadly, we are moving in the opposite direction.
The Government’s stance could not be clearer. They have rejected a number of opportunities to make the commitment firm in this important legislation. They have declined to accept a statutory commitment, as exists in countries such as Germany and the Netherlands, to a figure of 11,500. They have rejected the embedding in the Bill of the access criteria on how near people’s local post office will be. Post offices locally cannot live on warm words alone; good intentions and high hopes mean naught if we cannot have guarantees for the future.
Lorely Burt
Will the hon. Gentleman refresh my memory on how many new post offices were created under the Labour Government? Was there not a net decline, or managed decline, of the Post Office amounting to 7,000 post offices. Why does he decry the fact that this coalition Government are doing all they can to preserve and enhance the post office service that we have inherited?
Lorely Burt
The hon. Gentleman says that having large numbers of shares does not necessarily help, but being a small shareholder can be extremely helpful in large companies in which even small shareholders have a say and a voice.
Michael Connarty
I only wish that that were true. I assure the hon. Lady that although small shareholders can go along and make a protest and trumpet what they have to say, the bonuses, the sale of companies and the redundancies will still be voted through regardless of small the shareholders’ shouting. I am not in the business of standing on the fringe and shouting. I would much prefer the Bill to be rejected out of hand. I am against the privatisation of Royal Mail and I believe that the pension fund deficit was caused by the holidays taken by Royal Mail and Post Office Ltd, which were allowed by previous Governments of both hues. I would rather be standing here opposing what the Government are about to do to Royal Mail because I think that all the assurances we have been given, hard-won though they are, will not make a difference.
Capitalism will work as capitalism works and will do what is to the advantage of the people who hold the majority of the shares for the bottom line of their dividends. That will mean that people will lose their jobs and the Post Office will not be sustained using Royal Mail, which will not continue to provide a universal service at one price. The amendments will have to come with a lot more specific targets, which I do not see in the Bill or in any of the schedules to the Bill. Although I welcome the smaller amendments that have been made in this part of the Bill, I do not believe they will make a major difference to the outcome for Royal Mail or Post Office Ltd.
Nia Griffith
Lords amendment 17 requires that, when having regard to the requirement for a postal service to be financially viable, Ofcom should include the need for a reasonable commercial rate of return for the universal postal service. We argued this very determinedly in Committee. The provision of the universal postal service constitutes a considerable financial burden and we have seen how, in recent times, the opening up of opportunities for competitors to come in and cherry-pick some invitingly profitable parts of the postal delivery service, leaving Royal Mail to provide the universal postal service, has led to some considerable controversy about the price charged for the final mile. Royal Mail feels that the price set by Postcomm is too low, while the competitor providers would quite naturally always want the price kept as low as possible.
We welcome the fact that—as is made clear elsewhere in the Bill—Royal Mail will continue to be the provider for 10 years after privatisation, not just three. This will provide some much needed stability for the service and make it worth Royal Mail investing sufficiently in the necessary infrastructure. But crucial to the success and stability of the service is the need for the postal service to be financially viable. It would be immensely disruptive and damaging if a privatised Royal Mail got into difficulties and had to be bailed out. That is one reason it is essential that the regulator, Ofcom, should understand the need for a reasonable commercial rate of return for the universal postal service and make its judgements and interventions accordingly. This is common sense, so we shall support this amendment.
Lords amendments 16 and 18 provide clarity that the requirement for efficiency would apply after a reasonable amount of time and provide a definition of that reasonable period as a period beginning on the day that the provisions of the Bill come into force and which Ofcom considers to be reasonable. These amendments also help to improve the Bill and we shall support them.
Lords amendment 19 is an extremely important amendment. In Committee, we tried very hard to persuade the Government to amend the Bill to ensure that the post office network was used to provide the network of access points, and we were very disappointed that the Minister chose to turn down the opportunity to show any real commitment to the post office network and refused to accept our amendment on using the post office network to provide the access points to the postal service.
This Lords amendment does not safeguard the post office network. It does, however, provide some protection for the public, and some reassurance that the Secretary of State may direct Ofcom to take action to ensure that sufficient access points are provided to meet the interests of the public. It is not, however, anything like as specific or forceful as we would have liked. It does not specify, as legislation in some other countries does, the number of access points or their geographical distribution. This is done elsewhere either by specifying a precise number of outlets, as in the German model, or by insisting on specific access criteria, as in the Australian model.
This amendment is much more subjective and leaves it as a matter of opinion for the Secretary of State to decide what is meant by sufficient access points to meet the interests of the public. Will the Minister clarify the thinking behind this, and specify the number of access points? We understand that the access criteria, as laid down in the document “Securing the post office network in a digital age”, could be met by a network of some 7,000 or 8,000 post offices. When we were in government we put in money to keep open a network of 11,900 post offices, and the present Government are doing likewise. What number of access points is the Secretary of State likely to designate as sufficient to meet the interests of the public? Will it be as many as the current network of post offices, or will it be fewer? If it is the latter, some post offices could cease to be access points for postal services and not only would they lose the third of their income that comes from the Royal Mail work that they do but they would stand to lose a lot more income, as they would lose footfall.
Access points would not, of course, have to be post offices. We have already seen some very adverse public reaction when post offices have been moved into the upstairs of some high street chains, making them difficult to find and time-consuming to access. Will the Minister clarify the number of access points he envisages meeting the interests of the public, and whether the Secretary of State might also have criteria for the accessibility of access points so that we do not end up with access points that are hard to access?
Access points does not just mean counter services, but can also include post boxes. Will the Minister give us any indication of what number of post boxes the Secretary of State would consider sufficient to meet the interests of the public? Would it be the same number as now, or are we likely to see post boxes removed or boarded up? I say that as someone who has only recently had to fight for Royal Mail to restore a post box at Brynteg in my constituency, and I can well envisage that a profit-hungry privatised Royal Mail would look to reduce the number of post boxes in order to cut down on collection costs. That could mean people losing their local post box and no longer having one within walking distance of their homes. We welcome the amendment because it could improve the chances of a better service to the public, but we would have liked a much stronger amendment to give a stronger guarantee of a comprehensive network of access points.
We welcome Lords amendment 20 and the consequential amendments 15 and 25, because they enable Ofcom to impose a notification condition on any person providing, or intending to provide, a service within the scope of the universal postal service. Again, this is important for the rational management of the universal postal service, and we should support it. Lords amendment 21 makes a significant change to Ofcom’s review of the costs of the universal service obligation. Whereas previously the Bill specified that Ofcom would have to wait three years from when the Bill came into force before it could carry out a review of the costs of the universal service obligation, the amendment increases the period to five years, unless the Secretary of State intervenes and directs Ofcom to carry out a review. We have not sought amendment 21. Will the Minister clarify under what circumstances the Secretary of State might intervene before the five-year period is up?
On Lords amendment 22, we have consistently pointed out that the universal service provider incurs very large costs and needs to have as much certainty as possible about its future obligations so that it can plan long term and make the necessary investment in the latest technology. We therefore welcome the amendment, which means that Royal Mail will continue to be the universal service provider for the next 10 years, rather than just the next three years. This is a significant improvement. We know that significant modernisation has taken place within Royal Mail over the past few years. In the evidence sessions, the chief executive, Moya Greene, expressed her pride and delight in the world-class facilities that Royal Mail has in some of its depots, but she also pointed out that there are still areas awaiting modernisation. If Royal Mail is to continue to invest, the certainty of knowing that it will remain the provider of the universal service for the next 10 years will provide a much better basis for doing so than a mere three years. This is very important to create the necessary stability and justify the necessary investment. We therefore welcome the amendment.
Lorely Burt
This final string of amendments is another testimony to how the Government have listened to colleagues on both sides of the House. I greatly welcome a number of the amendments, particularly those that make the duties of Ofcom stronger than under Postcomm. I want to ask the Minister about amendment 19, which specifies that the Secretary of State can override the regulator on access points. We need to be wary about setting up an independent body but saying, “Never mind, the Secretary of State can override it”. We want to be sure that that could be done only to the benefit of the consumer. Bringing politics into the matter concerns me a little, so will my hon. Friend confirm that he cannot envisage any circumstances in which the Secretary of State could intervene, perhaps to specify that we do not need as many access points as now?
I particularly welcome amendment 17. Royal Mail has found it difficult to make a profit given the constraints under which it has had to work. The previous situation was impossible, so I am delighted with the amendment. We had to address the appalling decline in profitability, which was due to the ceiling imposed by the previous Government, who were unwise in their overzealous interpretation of the European legislation. If we can do it now, why could we not have created a more competitive environment for Royal Mail in the past? No one can make a profit with one hand tied behind their back. I particularly welcome Lords amendment 22, which guarantees that Royal Mail will remain a USP for 10 years, thereby removing any lurking uncertainty, which is particularly helpful.
Finally, Lords amendments 20, 15 and 25 require pre-notification to Ofcom of the planned commencement or expansion of a letters business on a specified scale. That will allow Ofcom to evaluate the potential impact beforehand, not after the stable door is opened and the horse has bolted. I wonder whether the Minister could say a little more about the circumstances in which he would envisage the provisions applying. Opposition Members have rightly raised the spectre of lots of other organisations wanting to come in and expand their letter delivery services, so how will the provisions work to ensure that Royal Mail’s commercial interests remain viable?
Thomas Docherty (Dunfermline and West Fife) (Lab)
I would like to press the Minister on Lords amendments 16 to 19, to clause 28. He has rightly spoken of the need for Royal Mail to continue to modernise, and I hope to give a simple example of why this is so important.
The House will recall the severe snow that affected large parts of Scotland last winter, including West Fife in my constituency. Fife was particularly badly hit because of the incompetence of Fife council, which failed to clear the roads and keep traffic moving. That had a huge knock-on effect for Royal Mail. If residents are stuck in villages or large parts of Dunfermline and cannot get out, it would quite obviously be unreasonable to expect Royal Mail to be able to deliver a regular service, because for genuine health and safety reasons it is vital that posties are not exposed to unnecessary risk. However, Royal Mail failed to provide a robust contingency programme to deal with the huge backlog that quickly built up.
It will probably not surprise the House to know that mid-December is a particularly busy time for Royal Mail, as there is a substantial increase in the volume of packages and cards. Unfortunately, business continues in the build-up to Christmas for many of my constituents. I was approached by a number of small businesses and local law firms that were waiting desperately for important documents—in some cases legal documents—and that were simply unable to get them delivered by Royal Mail. Many of my constituents showed some initiative and went to the Dunfermline sorting office to see whether they could simply collect their post. However, Royal Mail had no plan in place even to allow local businesses or my constituents to do so, which is a sign of poor planning by Royal Mail management. I would be grateful if the Minister outlined what discussions he has had with Royal Mail about that lack of strategic or, some might argue, tactical thinking, which should be happening at the local and regional levels.
The backlog was such that many of my constituents did not receive the parcels and cards that friends and relatives had sent them until the middle of January, which is clearly a most unsatisfactory circumstance. To be fair, after I met Royal Mail in the build-up to the new year, it took a number of steps, including putting on Sunday deliveries, drafting in additional staff from other sorting offices and putting on extra deliveries. But, with the best will in the world, I hope that the Minister will agree that it should not have been necessary for us to reach a state of chaos before Royal Mail took proactive steps to tackle the problem.