Royal Mail

Debate between Caroline Dinenage and Robert Flello

Tuesday 25th June 2013 Westminster Hall

[Caroline Dinenage]

The hon. Gentleman makes an excellent point, but for any business to continue, it cannot just look at what it is doing now; it must consider future challenges. As we have already heard, the self-styled rivals to Royal Mail offer daily challenges, and any company with long-term aspirations must be able to innovate, invest and grow in the future. That is the problem. At the moment, Royal Mail is competing for scarce public capital against other priorities such as schools and hospitals. Unless Royal Mail can access equity markets, every £1 that it borrows is another £1 on the national debt.

[Robert Flello]

I am listening carefully to the hon. Lady, but I do not recognise some of the things she is talking about. From my experience, the work force in Stoke-on-Trent have gone through incredible change and have adapted to new systems. Indeed, they are so efficient that I sometimes wonder how on earth our postal workers manage to do some of the things they are being asked to do. There is new equipment and new vans. There has been huge investment, and the work force have adapted incredibly to very stringent business standards. I really do not recognise the picture that she is painting when I see for myself what is happening in places such as Stoke-on-Trent.

[Caroline Dinenage]

I am sure Stoke-on-Trent is a fabulous paragon of what our wonderful mail services do—as is Gosport, I hasten to add. I do not think anyone today is in any way casting aspersions on either the service or the quality that Royal Mail delivers; we are talking about how to ensure that Royal Mail is able to continue doing that in the long term when we are facing other challenges to the public purse. Clearly, adding further to the national debt would not be responsible in the current environment, especially when Royal Mail can run on a fully commercial basis and already has the capacity to be profitable, as we have heard.

Royal Mail has the highest service specification of any major European universal postal service: 93% of first-class mail is delivered the next working day and 99.9% of delivery routes are completed each day. But I argue that the quality of service framework that applies to Royal Mail under public ownership would continue to apply under private ownership. We talk about private businesses being interested only in shareholder profit, but having run a private business for more than 20 years, we are also very keen on quality of service and maintaining our customers, which must be taken into consideration.

Leading postal operators that provide universal postal services in other European countries have moved into the private sector and been successful. The Austrian postal service and Deutsche Post, for example, have delivered consistently high mail profitability since flotation, and Deutsche Post is perceived as being in the vanguard of digital transition. Furthermore, levels of service have remained consistently high. In 2012, for example, the proportion of letters delivered the next day in Germany and Austria was 95%, compared with the 93% regulatory target in the UK. Those and other international examples show private sector investment delivering competitive, profitable postal frameworks without necessarily compromising on service levels.

The Government say that their overarching objective is to safeguard the one-price-goes-anywhere, six-days-a-week universal service, to deliver taxpayers value for money and to deliver customers the quality of service that they are used to. The best way to safeguard the universal service for future generations is to combine the best of both the public sector and the private sector and to give Royal Mail the independence, flexibility and, above all, access to the investment it needs to face future challenges.