Baroness Clark of Kilwinning
Main Page: Baroness Clark of Kilwinning (Labour - Life peer)(10 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Katy Clark (North Ayrshire and Arran) (Lab)
I beg to move,
That this House recognises the vital contribution that Royal Mail makes to rural areas; notes that the six day a week collection and delivery service to rural and remote areas is invaluable to local life; further notes that the relationship Royal Mail has with the post office network is equally important for the continued survival of post offices; recognises that the impending privatisation of Royal Mail will place a question mark over its willingness to maintain what may be loss-making services; and calls on the Government to provide more concrete, long-term protections for postal services in rural areas, remote areas and islands while ensuring that the postal universal service obligation in its current form endures.
It is a pleasure to have an opportunity to introduce this debate on the future of our post office network in the event of the Government deciding to proceed with their plans to privatise Royal Mail. I thank the Members in all parts of the House who signed the motion that led to the allocation of time for the debate by the Backbench Business Committee. The motion expresses the view that the privatisation of Royal Mail will lead to uncertainty over the continued survival of many post offices, particularly in rural areas where there are often loss-making services, and calls on the Government to provide
“more concrete, long-term protections for postal services in rural areas”.
I represent a rural constituency with many small town and island communities, and I know that there is a great deal of concern among post offices in my area about the impact that privatisation will have on the services that they provide. Post offices are central to the life of many small communities in particular. They provide a number of vital services, enabling people to obtain cash and even to buy a pint of milk.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I congratulate my hon. Friend on bringing this important issue to the attention of the House.
My constituent Hugh Gaffney, who is a leading member of the Communication Workers Union, has on several occasions—along with others—brought to my notice the impact on pensions that will result if the Government proceed with their plans. He and other members of the union consider pensions to be not national liabilities but deferred income, and he has asked me to convey to the House the strong views that they have expressed. Not only are the union members unhappy, but Mr Gaffney feels that if the Government go ahead with their proposals it will be—as he put it—daylight robbery.
Katy Clark
I was contacted by Hugh Gaffney today. He and other members of the union have been lobbying Scottish Members of Parliament in particular. It is vital for many pensioners who live in small communities—and in communities of many different types—to have access to postal services, but such access is also vital for many other people living in small communities.
Mark Tami (Alyn and Deeside) (Lab)
My hon. Friend is making a very powerful case. The post office is often also the only shop in the area, and it is a place where an elderly person can feel safe because he or she knows the person who works in the shop. If such people now have to travel to a much larger town, they will not benefit from the same sort of reassurance.
Katy Clark
My hon. Friend is absolutely correct; if the post office was not there—and if the shop that is part of the post office business was not there—there would not be anything in many communities for many of our most vulnerable constituents.
Neil Carmichael (Stroud) (Con)
I appreciate the opportunity to intervene in this debate, because in my constituency rural post offices are essential, as they obviously are in the hon. Lady’s constituency. Does she not recognise the Government’s wise decision to protect 11,500 post offices, modernising 6,000 of them, and to make sure that post offices that exist today will exist tomorrow and always in the future?
Katy Clark
I am grateful to the hon. Gentleman for his contribution. As he will be aware, however, organisations such as the National Federation of SubPostmasters believe that what the Government have done is inadequate to ensure the future of our post office network, and I suspect we will be exploring such issues in today’s debate. I also recognise that he, too, has a very rural constituency and that this debate is of as great importance to his constituents as it is to mine.
Huw Irranca-Davies (Ogmore) (Lab)
I congratulate my hon. Friend on securing this important debate. Does she recognise that the link between Royal Mail and individual post offices is crucial? We talk about “rural post offices”, but in my constituency, which borders the M4 and is a former coal mining constituency, all but three of the post offices are part of the rural network.
Katy Clark
My hon. Friend makes an incredibly important point, one that has been made to me by many who run post offices in my constituency.
The post office is vital, not only for individuals, but for many rural businesses—that is another point that many people in my constituency have made. I believe that those who work for Royal Mail have a strong public service ethos. They provide a vital service in many parts of the country, and in rural areas nobody else is going to provide it. There are real concerns about the impact that the privatisation of Royal Mail will have on not just Royal Mail itself, but our post office network. I suspect that many issues associated with that will be explored in this debate by many hon. Members from all political parties.
The background to this debate is, of course, the Postal Services Act 2011, which was passed by this House and allows not only for the privatisation of Royal Mail, but for competition for postal services. The Government have not, as yet, specified what form the sale of Royal Mail will take—whether it will be an initial public offering or a sale to private equity—although they have said that an IPO is their preferred method of sale. There is a great deal of concern throughout the country that the Government are rushing their timetable for political reasons. They have said that the sale will take place within the 2013-14 financial year. If that is the case, we will be hearing further details on the privatisation very soon.
The Government have framed their argument for privatisation in such a way as to suggest that Royal Mail is in imminent danger and that privatisation is the only solution, but that is not the case. Royal Mail is doing very well at the moment, and profits more than doubled in the past year, to more than £400 million. That is partly because the Government have taken over the assets and liabilities of Royal Mail’s pension scheme, saving the company £300 million each year. I congratulate the Government on taking that step. Of course Royal Mail needs access to capital for investment, but the urgency of the Government’s case seems to be driven more by a political timetable. There are many ways to get access to capital. For example, Network Rail is a public body that is authorised to access private capital, without affecting Government borrowing. This House has the right to expect the Government to look at other ways in which Royal Mail could get this access without going down the privatisation path.
The privatisation path is deeply unpopular, with not only the public, but Royal Mail staff. When the Communication Workers Union consulted its staff, it found that 96% opposed privatisation. Unite, which represents managers in Royal Mail, has also come out strongly against privatisation. The National Federation of SubPostmasters was originally sympathetic to some of what the Government were saying but it is now calling on them to halt the privatisation of Royal Mail, because of what it says is the Government’s failure to provide new work to post offices. In the briefings that it has been providing to Members throughout the country, which have been given to me by my constituents and when I have visited post offices over the past few days, the NFSP says that no new work has been awarded to post offices since May 2010 and that the new services that have been introduced are one-off transactions available only at a small number of post offices. It says that without the promised new Government work Post Office Ltd and individual post offices do not have a viable future and that a close relationship with Royal Mail is vital and will be jeopardised by privatisation.
One reason people are so opposed to privatisation is the fear that the universal service obligation will be under threat. The affordable six days a week service that is so valued in the United Kingdom is expensive to provide, particularly in rural areas. Rural post offices and rural postal services are most vulnerable because they are the most costly, and private parcel delivery companies routinely charge a high premium for delivering to remote or rural areas or to islands—or simply refuse to deliver at all.
A report by Citizens Advice Scotland in 2011 found that 83.8% of people surveyed living in remote parts of Scotland had been refused delivery altogether by a retailer using a carrier other than Royal Mail and that increased charges are normal. That is, of course, a problem not just in Scotland but throughout many parts of the UK.
Jesse Norman (Hereford and South Herefordshire) (Con)
The hon. Lady mentions the universal service obligation. Is it not the case that the obligation is now better protected than ever as it has been written into primary legislation by Parliament?
Katy Clark
There is not a short answer to that question, but I will try to explore it. My point is that the legal protections are inadequate, as there is a great deal of uncertainty about where we will go. The 10-year agreement that has been entered into is not good enough and does not last long enough. I expect that we will explore those issues as we continue the debate.
John McDonnell (Hayes and Harlington) (Lab)
Is it not true that the industry lost confidence in the Government because of the failure to deliver the additional work promised to the post offices?
Katy Clark
That is indeed the case and that is very much what the people running post offices are saying.
I appreciate the difficulties—the Labour Government grappled with them, too—but I must say to the Government that unless we deliver on providing new services to the post offices, change of this nature is unlikely to be successful. All political parties and all levels of government —not just Westminster, but the Scottish Government and local government—must do a lot more in this area. We need to consider ways in which we can ensure that more services are provided in post offices to ensure a long-term future for them.
Dr Sarah Wollaston (Totnes) (Con)
I am grateful to the hon. Lady, who is being very generous in taking interventions. Although I completely agree that post offices need access to more services, does she agree that allowing greater flexibility in the Post Office Local model about how services are delivered within the business is important? A bakery in Frogmore provided such a service, and the restrictions being placed on it seem entirely unreasonable. Does she also agree that more flexibility is needed in the funding for the Post Office Local model?
Katy Clark
The hon. Lady is correct. Many people who are running post offices are being very innovative in how they are trying to develop the system, but how they operate is very much determined by how the Post Office relates to them and how the commission is calculated. Many of the schemes proposed by the Government mean that they will get less commission in the future, which is another issue that many people who run post offices are raising with me.
As I said, there is a significant problem with the delivery of items in more rural areas unless Royal Mail provides that service. Even in areas of my constituency where private companies are normally willing to deliver, as soon as there is a bit of bad weather only Royal Mail continues to provide a service.
Although I will not have time to develop the point, another major problem is the fact that people in rural areas are disproportionately reliant on Royal Mail. Consumer Focus, which is now Consumer Futures, found that users in rural areas were often more reliant on traditional forms of communication, such as the post, because of the limited availability of others. We could have many debates about problems accessing high-speed internet in many parts of the country.
The Postal Services Act 2011 enabled other postal service providers to enter the direct delivery, end-to-end market, which is already enabling private postal service providers to cherry-pick services. For example, TNT has set up a delivery service in west, central and south-west London. It is able to win business because it can choose where, when and what to deliver. It does not maintain the service and standards that Royal Mail undertakes to provide, and it undercuts the terms, pay and conditions of postal workers so that it can provide a cheaper service.
TNT employs workers on zero-hours contracts, which means that they are not guaranteed any hours. A journalist who went undercover in a TNT workplace reported how workers “hustled” each day to get work. The practice of organisations like TNT is to over-hire staff, meaning that staff are turned away each day without any work and therefore, of course, without any pay.
Ian Paisley (North Antrim) (DUP)
The hon. Lady makes a vital point about how rural areas, especially remote rural areas, will be starved of a service. People on the island of Rathlin, which I represent, will be forced to come to the mainland of Northern Ireland to collect their post, as will people in remote rural areas. Such a strangulation of service cannot be allowed to happen.
Katy Clark
My constituents on islands such as Arran express the fear that they will no longer receive deliveries and will have to go to a central point for collections, as happens in many countries.
Lady Hermon (North Down) (Ind)
The hon. Lady has been generous in taking interventions and it has been helpful to hear her responses. If the Labour party were to win the 2015 general election—I know that an awful lot of people hope that that will happen—what practical steps would a Labour Government take not only to ensure the survival of rural post offices, but to encourage them to expand?
Katy Clark
I suspect that that topic could be the subject of a lengthy debate. I do not want to stray too far from the terms of the motion, but hon. Members on both sides of the House have outlined fully in previous debates what needs to be done to ensure that post offices have a viable and successful future. The Government have a role to play in that. I call on parties on all sides of the political debate to do what they can, because we all have areas where we are in power and can ensure that post offices get more work and receive more support.
The overall package of pay and conditions of not only TNT staff in London but those employed on a similar basis by other private companies, which have been able to operate in such a way only since the 2011 Act was passed, is significantly worse than that of the Royal Mail work force. Ofcom is responsible for regulating the sector. It has explicitly stated that it is regulating TNT, but it has done nothing whatsoever about TNT either cherry-picking services or undercutting wages and conditions.
The fear is that this is the face of future postal services. Although TNT and others might wish to operate in London and other profitable areas, they will not be interested in many other parts of the country, such as North Ayrshire and Arran. Of course, that means that Royal Mail will not be able to use the money it makes in profitable areas to subsidise—to cross-fertilise—services in less profitable areas so that it can provide a national service. The Government say that they support the universal service obligation, as the hon. Member for Hereford and South Herefordshire (Jesse Norman) suggested in an intervention.
Mr Iain McKenzie (Inverclyde) (Lab)
I thank my hon. Friend for giving way. She has been extremely generous, and I congratulate her on securing the debate. Did she, like me, see in the fly-on-the-wall documentary TNT’s habit of calling its delivery people back before they had finished their day’s work, thus returning mail to the depot, so that it took longer for people to receive it? That is an ongoing practice, and it is encouraged.
Katy Clark
My hon. Friend makes an incredibly important point.
If we proceed down this path, the pressures on future Governments and the management of Royal Mail will be to reduce requirements, as they will need to compete on a level playing field with other service providers. They will have to ensure that the universal service obligation is financially sustainable. If we go down the path suggested by the Government, loss-making rural services will be the most vulnerable and will be the first to go.
I appreciate the fact that the Government say that the universal service obligation is enshrined in law, but that covers only the bare minimum. Many of the requirements are set by Ofcom and can easily be changed. The regulator has recently consulted on user needs, including getting rid of first-class mail and thus next-day delivery, and moving from a six-day to a five-day service. That may not happen now, but if privatisation goes ahead it is more likely. The privately run PostNL in the Netherlands has put pressure on both the regulator and the Dutch Government regarding the universal service obligation and there are now plans to drop Monday deliveries.
There is no guarantee that the inter-business agreement that has been entered into between Royal Mail and the Post Office will continue or remain unchanged at the end of the 10-year period. I do not believe that the protections that we have been offered are adequate, so I am asking the Government to halt the sale of Royal Mail to give proper consideration to how rural services can be provided in the longer term, and to put in place stronger legal protections for the universal service obligation. I believe that cross-party support for the motion reflects a genuine concern about the issue, and I urge the Government to look at the issue in detail, and to provide a detailed response today.
Dan Rogerson
The hon. Gentleman is right. We must look at the positives. The hon. Member for North Ayrshire and Arran raised a lot of fears, some of which are natural, but we must look at how justified they are. We must ensure that we are not speaking in political terms to draw the attention of the media and to provide a subject on which to campaign, but that we look at the reality. That is why I am delighted that the Government have invested money in the network as part of the programme.
Katy Clark
Does the hon. Gentleman accept that the way TNT operates in London is the reality of what we are likely to see in the future?
Dan Rogerson
The hon. Lady made good points about employment practices, which I think will be of concern to people looking at employment in that sector. However, we are talking about the universal service obligation, and we will probably not find TNT falling over itself to provide alternative services in many areas of the rural network that we are talking about. I am confining my remarks primarily to the rural network, although I accept what she says about zero-hours contracts, which is a debate for another time.
Katy Clark
Does the hon. Gentleman accept that we are talking about a framework that will mean less money is available for Royal Mail, which will mean it will not be able to provide the services we have all been talking about? Parliament must have a framework through which Royal Mail is able to survive and post offices to flourish. Is that not what we are debating?
Dan Rogerson
Absolutely, and for some time regulators in other privatised industries have been looking at what is viable and what is not—water bills are a massive issue in my part of the world, and we have had a long debate about what is necessary for investment in the service, what is an acceptable level of profit, and what will be provided. Ofcom’s role is crucial.
Katy Clark
Does the hon. Lady not accept that what Members have been saying today is that the commercial pressures will be on both Royal Mail and the Government to reduce those universal service obligations if privatisation goes ahead?
Jo Swinson
It is up to Parliament to defend that universal service. That lies in Parliament’s power. We have protections in place through the 2011 Act because the Government recognised that that is an important service. [Interruption.] Members heckle from a sedentary position, but I highlight that it was the coalition Government who enshrined the universal service in legislation, not the previous Government. I think that it is incumbent on all Members of Parliament to ensure that we protect that, because it can be changed only if Members of Parliament decide to do so. I can certainly give an undertaking that I have no desire to do so. Perhaps Opposition Members are worried that they might feel under too much pressure and cave in; that is all I can imagine must be the cause of the concerns they are raising.
Katy Clark
This debate has been a useful occasion for Members in all parts of the House to express to the Government the genuine concerns in all parts of the United Kingdom about the implications should they decide to proceed with the privatisation of Royal Mail over the coming weeks. They have said that it is going to happen in this financial year, and there is therefore a real possibility that we might be revisiting this issue very soon. I hope that the Minister has been listening very carefully to what has been said. She represents a constituency with many rural post offices and will therefore have a strong constituency interest in the issue.
Members in all parts of the House have spoken about the wide range of organisations that have concerns. I hope that the Minister will look at what those organisations are saying, particularly the National Federation of SubPostmasters, which points out that no substantial new work has been provided to the post office service. Until that new work is delivered throughout the country, we should not be proceeding in this direction.
A number of Members have spoken about the importance of the competition regime and the impact that the new providers are having, particularly in London. I ask the Minister to see whether it is possible to ensure that the competition regime is on a level playing field so that all providers are acting in a way that enables Royal Mail to continue to provide a universal service. She has not come forward with long-term, concrete protection today. I hope that she will do so over the coming period before any proposals are brought to this House to announce that the Government are going to proceed with the privatisation.
Question put and agreed to.
Resolved,
That this House recognises the vital contribution that Royal Mail makes to rural areas; notes that the six day a week collection and delivery service to rural and remote areas is invaluable to local life; further notes that the relationship Royal Mail has with the post office network is equally important for the continued survival of post offices; recognises that the impending privatisation of Royal Mail will place a question mark over its willingness to maintain what may be loss-making services; and calls on the Government to provide more concrete, long-term protections for postal services in rural areas, remote areas and islands while ensuring that the postal universal service obligation in its current form endures.