Royal Mail

Chuka Umunna Excerpts

Wednesday 10th July 2013 Commons Chamber

[Mr Chuka Umunna (Streatham) (Lab)]

We opposed the Government’s privatisation of Royal Mail during the passage of the Postal Services Act 2011; we oppose it today. Maintaining Royal Mail in public ownership gives the taxpayer an ongoing direct interest in the maintenance of universal postal services in this country; helps safeguard the vital link that the Royal Mail has with the Post Office; and ensures that the taxpayer gets to share in the upside of modernisation and the increased profits that Royal Mail delivers. Despite that, the Government have pressed on regardless with this sale, and they have failed adequately to justify why they must sell now.

On one side, there is an unusual coalition against this move: the Opposition; the Conservative-supporting Bow Group, which described this move as “poisonous”; the Royal Mail’s employees, represented of course by the CWU; and the National Federation of SubPostmasters. The Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), wrote to a constituent in 2009 saying that he, too, was opposed. On the other side, there is the Government, who now include the Minister of State. The Government are ignoring the huge changes that have taken place since the passage of the Act. Chief among them is the more than doubling of Royal Mail’s profits to £403 million, which calls into question assertions that there is no prospect of the Royal Mail being self-financing in the future.

Having nationalised the organisation’s debts by taking on its pension liabilities, the Government now want to privatise the profit at the very time it is making money. How on earth does that make any sense? Now that the Government have determined to pursue this course, there is every sign that this treasured national institution is being sold off on the cheap to get income quickly to a Treasury whose economic strategy has failed. As long as the Government fail to address key questions about Royal Mail, which I will outline, that will be the conclusion that people will be entitled to reach.

I have the following questions for the Secretary of State. First, Royal Mail faces competition from other postal service operators who are not subject to the same high performance and service quality standards as it is, putting it at a competitive disadvantage. How will this not depress the sale price, and what will he do about it? Secondly, this cannot be allowed to put the Post Office at risk. What guarantees can he give that a privately owned Royal Mail will renew the agreement under which the Post Office provides Royal Mail products, which is essential to the Post Office’s future? What will happen in 2022? Is it not the case that he cannot give any guarantees on what will happen when the agreement expires? On the future of the Post Office, when can we expect to hear more on his plans for mutualisation? On what date will that commence?

Thirdly and finally, is it not the case that there is every prospect that a privatised Royal Mail will seek to sell off valuable locations in high-value urban centres for a fast buck, which will be replaced by distant depots, sorting offices and the rest, which are hard to get to for consumers and small businesses? Yes, there have been successful privatisations in times past which have delivered for the British people, but there have also been examples in rail and energy under the last Conservative Government which were badly executed privatisations that resulted in a long-term bad deal for consumers and small businesses. It is therefore not surprising that the British people oppose this move today.

[Vince Cable]

I think the most interesting and eloquent part of the Opposition’s response was what the hon. Gentleman did not say. He did not say that the next Labour Government, if there is one, will renationalise Royal Mail. He is opposed to privatisation, but he is not proposing to reverse it. That eloquent silence will be heard not just by the investors, but by the trade unions, so we know clearly that we are now on an irreversible course.

The hon. Gentleman talks about pressing on with this sale and his colleagues use the phrase “fire sale”. This is the longest fire sale in history. It has taken five years from the inception of the process under a Labour Government. He talks about self-financing. He knows perfectly well what the rules of public finance are—that a nationalised institution is not able to borrow freely in the markets, as it would wish. It is useful to compare the experience of Royal Mail with what is happening in, for example, Germany. The hon. Gentleman often cites Germany as a role model for good industrial policy, and we have many lessons to learn from it. Germany has a privatised mail system. In the past two years it has invested €750 million and will do so next year, raised on the market, competing ahead of Royal Mail in what are increasingly international markets. I hope he heeds that experience.

The hon. Gentleman worries about a race to the bottom in competition. The main competition for Royal Mail has not come from private competitors; it has come from technology. Within the past 10 years, mail has lost 25% of its business because of e-mail and we have to respond to that. Royal Mail was declining. It was in danger of losing the universal service obligation. We are now giving it the tools to compete and to be a successful enterprise—something that will benefit the country and the workers within it.