Postal Services Bill

Baroness Howe of Idlicote Excerpts

Wednesday 16th February 2011 Lords Chamber

[Baroness Howe of Idlicote]

My Lords, I, too, congratulate the noble Lords, Lord Empey and Lord Dobbs, on their quite excellent maiden speeches. I also start by thanking the noble Baroness, Lady Wilcox, for the excellent way in which she introduced this government Bill. It is clear that the Bill is welcome in a number of ways; equally, it is clear that all of us share a number of concerns about how the future will work out for this service—this serious piece of national infrastructure, as the noble Lord, Lord Empey, put it so well—particularly for one of our nation’s most cherished institutions, the Post Office.

The Post Office is clearly valuable to all of us but it is uniquely placed to cater for vulnerable and deprived groups. It is also the largest retail network of its kind in the country, with more branches than the major high street banks combined. It has also gone above and beyond its statutory obligations to ensure that it provides accessibility and additional services for those who require them. This is especially true for their disabled and elderly customers.

The Post Office has recently conducted access audits across the whole of the branch network. A temporary team of 50 managers visited over 850 branches and talked with sub-postmasters about their plans to improve accessibility within their outlets. I enjoyed listening to the noble Baroness, Lady Kennedy of The Shaws, about the potential of her further ideas for how they could be even better used. Part of the audit showed that impressive information was gathered about accessibility and facilities, such as low payment counters, induction loops, alternative language availability and other services. Of course improvements are required but the erosion of this valuable network would be disastrous for those who rely on such services. Today I will consider how any deterioration in the network’s strength might best be prevented.

First, the Bill is a welcome attempt to address the dire situation facing our universal postal service—Royal Mail and the Post Office. Let us be in no doubt that the future of the two companies, though structurally separate, will be entwined after the passage of the Bill, thankfully. The Bill goes a long way to addressing the problems Sir Richard Hooper identified in the immediate crises facing these companies, as many people have referred to. Perhaps most importantly, it alleviates the crushing burden of the £10 billion historic pension deficit. This alone costs the company around £300 million a year, so that is a most welcome development. It also allows Royal Mail to continue on the long and sometimes tortuous path of modernisation—although at a faster pace, I hope.

Secondly, a healthy, vigorous Royal Mail is critical. I am sure your Lordships will be united in wishing to see the business look to the future with greater financial certainty and a substantial investment to meet the needs of rapidly changing consumer demands. Only by modernising and meeting the needs of modern consumers can Royal Mail generate the income to meet properly its universal service obligations. In turn, this should enable it to operate a commercially productive relationship with the Post Office long into the future.

Thirdly, the Bill attempts to address the regulatory landscape in which postal services operate, which the noble Lord, Lord Mandelson, and others have mentioned. There is wide agreement that the current framework has failed. However, I have my doubts as to whether the Bill does enough to provide change in this area. There is a bizarre situation, which others have mentioned, whereby the taxpayer and domestic mail users subsidise private companies to the tune of around £160 million a year through privileged access to the Royal Mail network. I am sure all noble Lords would like assurances that such a scenario does not continue. Again, if the bleeding of funds away from Royal Mail through such regulation continues, it will adversely affect its ability to put business through the Post Office.

I have spoken in support of the Bill as it stands, but what is of concern to those of us seeking to protect the national network of post offices is how little is included on the future of Post Office Ltd. The Bill makes provision for a possible mutualisation of the Post Office. Like others, I welcome that idea but how this will happen is unclear and very much a matter for the Government of the day, whenever that day comes. I believe the Minister for Postal Services has also stated in another place that this will be very much on the horizon some time after 2014. What is of concern to parliamentarians seeking to protect the post office network is the extent to which its future will be at the whim of the policy of the Government of that time, and not subject to the legislation before us.

The present Government have committed to a £1.34 billion funding package to transform the network, which is, of course, very welcome, as, indeed, is the commitment to maintain the network at its current level with no further programme of closures. Nevertheless, when Ministers are trying to tighten the reins on public expenditure, the level of government business being put through the Post Office becomes even more crucial. Until very recently, such business was the most important source of revenue for sub-postmasters. It also raised footfall through their branches and made their ancillary businesses viable. However, as we have all heard, government business has declined dramatically over recent years. Indeed, in 2008, the Government very nearly took away the contract for the Post Office card account—a critical source of revenue—but for the last-minute intervention by worried senior Cabinet Ministers at that time.

The current Government have promised to make the Post Office the “front office for government”. What I, your Lordships, sub-postmasters, consumers, and many other interested parties would, I am sure, like to hear are specific proposals and commitments on how this can be achieved, and when. Therefore, I look forward to hearing detailed assurances from the Minister when she replies.