Postal Services Bill

Damian Collins Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Bailey]

Exactly. That will be one of the determining factors in whether post office sub-postmasters and other employees want to work within a mutual framework. The fact remains that Royal Mail, driven by an imperative to make more profit, will be bound to re-examine some of its contracts with the Post Office, and there is no guarantee that they will be sustained. About a third of Post Office Ltd’s total income is dependent on those contracts with Royal Mail, and that creates a degree of uncertainty and risk that could well work against those involved in the Post Office being prepared to accept a mutual organisation.

[Damian Collins (Folkestone and Hythe) (Con)]

Listening to the hon. Gentleman’s remarks, one might think that the post office network has gone through a halcyon period. What guarantees were there for the thousands of postmasters who saw their businesses close over the past few years?

[Mr Bailey]

I do not recall anybody saying that post offices had gone through a halcyon period, but under the last post office reorganisation many sub-postmasters applied for the compensation package that was agreed for them. I very much doubt that that would still be available under a revised and privatised process.

--- Later in debate ---

[Damian Collins (Folkestone and Hythe) (Con)]

Following the remarks of the hon. Member for Angus (Mr Weir) much earlier in the debate, I begin by pointing out that in some ways the Bill is too good to be true. He raised concerns that people in rural areas, especially in Scotland, would no longer have a universal service if the Bill is passed. However, the answer is that of course they will. People who live in built-up areas will continue to subsidise the post of people who live in rural and distant areas. People who live in constituencies in the south-east of England, such as mine in Folkestone and Hythe, will continue, relatively, to subsidise people who live in remote areas, because we all believe in universal postal provision, and that is included in the Bill.

Our concerns are that Royal Mail will run out of money to sustain its current universal six-days-a-week service unless its pension deficit is solved and, crucially, the business is transformed. That view is not unique to Government Members; it was expressed by the former Secretary of State, Lord Mandelson, when the previous Postal Services Bill was introduced in the House of Lords last year. There is a degree of common ground. It is a question of how we go forward in a way that gives value to customers of Royal Mail and the Post Office, and the taxpayers who must pick up the liability for the Royal Mail pension pot. Under the provisions of the Bill, the taxpayer will take on a considerable liability, so it is right that in return we should consider how the Royal Mail business can be transformed and work better.

Hon. Members have spoken about all aspects of the Bill; I shall touch on only a couple of them. Going back to the remarks made by the hon. Member for Angus (Mr Weir) and my hon. Friend the Member for Argyll and Bute (Mr Reid) earlier in the debate, clauses 35 and 37 provide that if Ofcom considers that the efficiency of the universal system can be better delivered with additional suppliers coming in to support that service, it will have the opportunity to advise the Secretary of State accordingly. That can only strengthen the quality of the universal provision. A number of hon. Members on the Government Benches would not see that as a bad thing.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Does the hon. Gentleman accept that one of the great lessons of the privatised utilities is that none of the regulators have had sufficient teeth to stand up for the interests of consumers? Why should the regulator in this case be any different?

[Damian Collins]

I can speak only from my own experience, having previously worked in the advertising industry, where we encountered the wrath of Ofcom. It seemed only too ready to stand up for the rights of consumers, and I have every confidence that it will do so in the case of postal services too.

Opposition Members have asked repeatedly what guarantees there are. What guarantees have there been for the Post Office and Royal Mail over the past 13 years, when we have seen thousands of post offices closed? The hon. Member for Hampstead and Kilburn (Glenda Jackson) gave an impassioned speech about the removal of post office services and sub-post offices from her constituency. We would all concur with that, and we would all share the view that they play a vital role in the community, but the previous system made no guarantees to those post offices. We have seen a slow withering of the post office network on the vine, a slow reduction in the support for post offices, and their closure. We cannot go on like that.

I am interested in the provisions of clauses 26 and 27, which give authority to postal service providers and get rid of the current licensing regime. The Secretary of State believes that that will be more efficient and cheaper for businesses. I would be encouraged if the same mechanism allowed new providers to come in. During the debate, hon. Members have asked how new sub-post offices can open and how postal providers can come into the market.

In my constituency—other hon. Members may have had the same experience—to try to fight the pressure for branch closures, independent businesses fought hard to keep those post offices open. The Enbrook Valley post office in my constituency is a sub-post office run by an independent retailer. He had to fight hard to maintain that provision. He wanted to put a business case together to keep that post office working, and with the support of the local community and money raised by the local community, he did just that. I would like to see more of that, and the process made easier through the Bill.

I am interested in the work of organisations such as Pub is the Hub, which try to turn pubs into multifaceted businesses, particularly in rural communities, where the post office can play a part too. In a village in my constituency—Elham, where I live—when the post office closed, provision was transferred to a counter operating in the King’s Arms pub. Never before had it been realised that there was such demand for picking up books of stamps at lunchtime. There may well be more business models like that which we could encourage, through a mechanism that encourages new providers to come into the post office branch network market.

I agree that it is right that the post office network should not be privatised as part of the provisions of the Bill. However, that does not mean that there should be stasis around the post office network, with nothing changing. Although we welcome the money that the Secretary of State announced today to support the network, that does not mean that there cannot be innovation in provision and an attempt to attract new providers. I look forward to debating the Bill, especially clauses 26 and 27, and listening to the debate as it progresses through Parliament. May it offer some opportunity for new providers to come in, and for the Secretary of State to encourage and support that.