Future of Postal Services

Chi Onwurah Excerpts

Tuesday 10th January 2023 Westminster Hall

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Gary. I thank my hon. Friend the Member for Birmingham, Hall Green (Tahir Ali) for securing this incredibly vital debate. He brings a wealth of expertise of the issue, having worked for both Royal Mail and the CWU.

After almost 500 years as a public institution, Royal Mail today connects more than 32 million addresses across the United Kingdom and is the UK’s sole designated universal service provider. Its 160,000 staff are essential workers. Whether they were delivering tens of millions of test and trace kits or being a point of contact for those isolating during the pandemic, we in the Opposition do not forget their incredibly vital work during that dark time, or since, and before. That is why the debate is so well attended by Opposition Members and why we have had such fantastic and passionate contributions from my hon. Friends the Members for Halifax (Holly Lynch), for Liverpool, Riverside (Kim Johnson), for York Central (Rachael Maskell), for Leeds East (Richard Burgon), for Kingston upon Hull West and Hessle (Emma Hardy) and for Llanelli (Dame Nia Griffith), as well as contributions from Members from all parties.

Despite this incredibly important public service and its importance to communities and the economy, the Government are failing postal service users and communities, putting ideology above competence. In July to September last year, Royal Mail delivered 72% of first class mail the next working day and 93% of second class within three working days, both below its targets. As we have also heard, the Conservative Government have overseen sharp increases in the number of so-called temporarily closed post offices and part-time outreach services, leading to significant and growing cracks in coverage. That trend is particularly severe in rural areas. Older and disabled people, carers, and people who do not use the internet, of whom there are still many, are disproportionately impacted. The current industrial dispute has had a huge impact on both workers and service users across the country. We in the Labour party are glad that Royal Mail has returned to the negotiating table, which is what we called for, but the Government really need to do their job to support a resolution. They owe that to Royal Mail as key workers, and to the public and businesses, all of which rely on Royal Mail.

The Government’s decisions on Royal Mail risk a disaster for customers and workers, and a degradation of Royal Mail as a major contributor to the UK economy. An organisation that was once thriving has had job losses in the thousands and a reduction in service, all while giving out over £400 million in dividends and £167 million in share buy-backs. The CWU has been raising concerns about the financial mismanagement of Royal Mail for several months, so can the Minister outline what discussions he has had with Royal Mail regarding its profits and dividends during the last financial year? Can he explain why workers and service users are being asked to pay more for less of a service, at a time when the cost of living crisis is impacting so many families across our nation?

As has been highlighted, there has been a decline in letter delivery. We understand that Royal Mail is seeking to grow parcel delivery, but that strategy appears to be stagnating, so what is the strategy now? Can the Minister say what his vision is for the future of postal services, and when he will act to ensure that Royal Mail returns to pre-pandemic levels of performance? Finally, the recent increase in the holding share by Vesa Equity, a company with links to Russia, is a matter of grave concern. Can the Minister outline the Government’s reasoning for not using the powers in the National Security and Investment Act 2021 in relation to that investment?

Only a Labour Government, supporting the partnership between management, workers and trade unions, can achieve lasting success for our postal services. In two days’ time, my hon. Friend the Member for Jarrow (Kate Osborne) will lead a debate on the universal service obligation, but can the Minister provide assurances today that this Government are committed to the USO, as we are, and has he made an assessment of the impact of a five-day service proposal on the economy? The Labour party will work with postal service providers to deliver vital goods and services, and to provide social value.

--- Later in debate ---

[Kevin Hollinrake]

Thank you. It is a pleasure to serve under your chairmanship, Sir Gary, and I congratulate the hon. Member for Birmingham, Hall Green, on securing today’s debate about the future of postal services, particularly given his experience and expertise. When somebody with that kind of experience and expertise speaks, we should all listen very carefully.

I agree with the hon. Gentleman that postal services are an integral part of the modern economy, allowing the smallest of businesses to connect with customers across the world and providing consumers with access to a vast range of products. The importance of the postal service to keeping people connected was never more apparent than during the coronavirus pandemic, and I am hugely grateful to the delivery workers who worked exceptionally hard to deliver letters and parcels in those very difficult circumstances. The post office network also plays a unique and vital role as part of the UK postal system, and I will address the points that were raised regarding that network shortly.

To deal first and foremost with the future of the universal postal service, which was raised by the hon. Member for Birmingham, Hall Green, the right hon. Members for Orkney and Shetland (Mr Carmichael) and for Islington North (Jeremy Corbyn), and others, the Government’s postal policy objective continues to be a financially sustainable and efficient universal service that meets the needs of users within an open and competitive postal market. That is why the six-day week, “one price goes anywhere” and the universal service remain at the heart of the regulatory regime, and why Ofcom has a primary duty to secure that provision.

To be completely clear, the Government currently have no plans to change the statutory minimum requirements of a universal postal service, which are set out in the Postal Services Act 2011. However, we accept that the universal postal service is facing challenges, particularly given the decline in letter volumes, which have halved since privatisation in 2013. That answers the question raised by the shadow Minister, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), about why people are paying more for less. Part of the difficulty is that the volumes have fallen so much, which affects revenue.

[Chi Onwurah]

Will the Minister give way?

[Kevin Hollinrake]

Very briefly, as I have very little time.

[Chi Onwurah]

I thank him for giving way, but he has not answered my question at all. There is a decline in one part of the market, but another part is growing. My question was: what is the vision?

[Kevin Hollinrake]

That is a separate point that I will come to, if I may. I have yet to hear a convincing case for the need for change to meet users’ needs and ensure the financial sustainability of a universal postal service. I have met with both Ofcom and Royal Mail management to discuss that issue. I have made it clear to Royal Mail that it needs to make any case for change to Ofcom, and that I will fully consider any advice the regulator gives me on the future scope of the universal postal service.

The hon. Members for Chesham and Amersham (Sarah Green) and for Motherwell and Wishaw (Marion Fellows), who I have worked with closely on other matters regarding the Post Office, raised concerns about quality of service. I am aware that over the last few years the business has faced increased pressures on its operations for a variety of reasons. First, there was the covid pandemic and its lingering effects; secondly, operational revisions were required to modernise and transform the business; and, most recently, there was the industrial dispute with the Communication Workers Union. I do not accept the point made by the hon. Member for Leeds East (Richard Burgon) that this is union busting. The management has been clear that there will be no compulsory redundancies, but these issues impact both the business and users of postal services, particularly when important mail items are delayed.