Postal Services Bill

David Mowat Excerpts

Wednesday 12th January 2011 Commons Chamber

[Michael Connarty]

As I said, the new clause is intended to ameliorate the impact, not to negate it. I would prefer a permanent agreement that the Royal Mail and the Post Office would not be sundered by the Bill. It is an illusion that the market will allow things to become more efficient. I do not believe that.

[David Mowat (Warrington South) (Con)]

Will the hon. Gentleman explain how the Bill, which gives each of the 7,000 currently unviable post offices approximately £200,000 over the next four years to keep going, is an attack on their communities?

[Michael Connarty]

It might be useful to read the Bill. That is not in the Bill. It is an under-the-counter promise by the Government that they have set aside a sum of money. That is no different from the sum set aside in the past by the Government every time they carried out a reorganisation to sustain the unsustainable. It is clear that those post offices are not viable in the market. If those post offices and sub-post offices lose another £343 million, which is the cost per year if the business arrangement is broken, that is where the money will go. It will replace the money that should have come from the agreement. The money will be required to pay the people. At present 900 post offices are up for sale, apart from those that are temporarily closed, as the hon. Member for Colchester said.

It is important that we realise that, in this process, the Conservative-led Government, supported by the Liberals against their pledges in their own manifesto, are trying to move the Post Office and Royal Mail into a market and away from a controlled situation. There is talk now of the inter-business agreement. There will be talk later of the universal service obligation, which will also be destroyed by the Bill. In the USA, the arch-capitalist country, the postal service is permanently in the public sector. It will not be taken out of the public sector because it is seen as a public institution. We will follow a route that will cause us to destroy part of our institutions.

I do not believe that Members are kidding themselves. I am sure they have talked to their communities when a sub-post office has been closed and heard the anger when that happens. I am sure that they have talked to people when they lose their Crown office and get a second-rate service from a post office put into the back of a supermarket. People do not like it because it destroys the structures of their communities.

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[Ian Murray]

Absolutely. My hon. Friend makes his point clearly.

[David Mowat]

Will the hon. Gentleman give way?

[Ian Murray]

I will just make a little progress, because many hon. Members want to speak.

The Bill does not safeguard the inter-business agreement through which Royal Mail guarantees the use of the Post Office as its retail arm. When the agreement is renegotiated, a privatised Royal Mail will try to reduce costs by using other outlets such as supermarkets and high street chains instead of the post office network.

In my intervention on the hon. Member for Northampton South, I used the example of Germany, which has privatised, or certainly reformed, its national mail services through Deutsche Post. It has written protection of its post office network and services into legislation. We are giving no such protection. Deutsche Post could happily buy Royal Mail and decimate the unprotected UK post office network to subsidise its network at home, which is guaranteed by legislation.

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[Mr Anderson]

I welcome the debate. Like the hon. Member for Colchester (Bob Russell), I do not want to see the privatisation of the Post Office at all, but if it happens the new clause will ameliorate its effects. Does anyone really believe that the Post Office, going out into the world of competition, would be able to survive against some of the competitors it would be up against? The case for going outside has not been made, but if it does go outside, the Post Office should be protected. I am not quite sure where the Liberal Democrats are coming from—there is nothing unusual in that—but they seem to think that European Union law stops us passing this new clause. We have had no evidence to demonstrate that, and I do not believe that any evidence was shown in Committee either.

I hope that the Minister will explain exactly what rule in European legislation prevents an inter-business agreement. Everybody else who appeared before the Committee seemed to think it was a good idea. George Thomson of the National Federation of SubPostmasters said:

“On separating Post Office Ltd from Royal Mail, it is unprecedented and we have to get it right, which is why we need a 10-year inter-business agreement… We need security for sub-postmasters; they have £2 billion of their own money invested in this business. If you were a company investing £2 billion in a PFI…you would get a 21-year contract. I am not asking for a 21-year contract, but…for a 10-year IBA contract.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 29, Q70.]

He was not alone. Paula Vennells, managing director of Post Office Ltd, who ought to know as she was part of the new management, said that

“we have a very strong commercial relationship with Royal Mail and that is something that both businesses would want to continue, so as we transform the post office network we will make it into something that Royal Mail will want to use.”

Moya Greene, the chief executive of Royal Mail, concurred, stating that it was

“unthinkable that we would not have a very long-term relationship with the Post Office.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 17-18, Q42.]

Even Richard Hooper, who brought forward the original report, said in the updated report that he believed that the

“importance of the inter-business agreement should not be underestimated”.––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 114, Q228.]

It is a shame that those three people did not say that they wanted the IBA to continue in the way the amendment suggests. If we do not have that in black and white, we shall experience a rerun of what we witnessed in the Chamber between 12 and 12.30 pm today, when the Prime Minister repeatedly replied to questions by saying, “We hope that this can happen”, “We wish this to happen”, or “We are looking into ways of making this happen.”

If privatisation takes place in the way that is being proposed, when the contract goes outside people will eat it up. I spent 30 years in the trade union movement trying to unravel agreements and contracts or renegotiate agreements with organisations. I would say, “That must be there in black and white. If it is not in it, you cannot win it.” If we do not provide protection for Royal Mail and the Post Office that works in the way in which the IBA has worked so far, the service will clearly not be saved.

I appreciate that members of the Government are naïve amateurs who are doing their best to make things work, but that is not good enough. We need to ensure that services are supported. We are told that European Union rules are preventing that, and I hope that the Minister, who has now returned to the Chamber, will be able to explain exactly how they are doing so. When Corus was threatened with closure on Teesside, my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and I were constantly told that EU rules prevented Government intervention. We were told that the Germans and the Dutch used those rules, and that the British must play by the rules. We were losing out. Unless we have real, clear evidence that this cannot be done under law, the Government’s case will not hold water.

[David Mowat]

The hon. Gentleman has talked of the way in which the IBA works, which seems to have resulted in three quarters of the network becoming unsustainable or unviable. How does he think that extending the IBA in its current form will improve the position?

[Mr Anderson]

The hon. Gentleman is clearly under the misapprehension that public service is about nothing more than making money. We must accept that the public sometimes have to pay for the delivery of a public service in a way that does not satisfy accountants. We have a health service that costs £100 billion. No one says that it is in deficit. We have a defence system that effectively requires us to pay out all the money: we are not given any proper help. The postal service is also a quality public service that we should be proud of. The Labour Government invested a large amount of public money in it, but the truth is that we did not succeed. We were maintaining post offices that we had to accept were effectively a drain on public resources. The question that we must ask, and the question that people in the country will ask, is whether this is money well spent, and I would argue that it is.

[David Mowat]

I entirely agree that the sustainability of the post office network is a valuable public service, which is why I am delighted that the Bill will provide £1.3 billion to sustain it over the next four years—an average of £40,000 per post office per year. What I want to understand is how the continuation of an IBA that has apparently caused three quarters of the current network to lose money will help.

[Mr Anderson]

I think that that question should be put to Ministers. Nothing else will change: the need is still there, and the service must still be provided. In the last Parliament we invested £3.9 billion in the network, but that was clearly not sufficient. As was pointed out by the hon. Member for Angus (Mr Weir), we must accept that we are living in a different world now. People are obtaining their television and driving licences on line and using e-mail, but that does not mean that we as a nation should not be prepared to say that the post office network is so important that it should be subsidised by the public purse.

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[Margaret Curran]

I strongly agree, because that goes to the heart of the protections that are required and explains why people are deeply worried about this legislation. They see it as a forerunner of many post office closures because we are not taking the necessary steps to protect the service and we are not being proactive. Communities, particularly the ones in greatest need, look to their representatives to protect them and to take action that will look after their best interests. If we do not do this during today’s debate, we are being, at best, neglectful. If we pass the Bill in its entirety, we will be taking negative action in respect of the interests of the post office network and, therefore, of those communities.

[David Mowat]

I have difficulty understanding how the continuation of the IBA can be more powerful than the policy whereby 11,500 post offices are guaranteed to be kept open for four more years. Can the hon. Lady answer that question?

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[Margaret Curran]

That is a very good point and I associate myself strongly with it. Things are very difficult as they stand and if the IBA is not strengthened in the proposed way, we will make the situation much worse and make it a much less attractive option for people.

[David Mowat]

I agree with the need to keep the 11,500 post offices open, which is exactly what the Bill is doing, but I have genuine difficulty understanding why the IBA, which has resulted, among other things, in two thirds of the post offices that are open making a loss, is more important than the clear policy commitment to keep 11,500 post offices open.

[Margaret Curran]

I disagree fundamentally with the hon. Gentleman. First, it is not the IBA that has led to post office closures in the past. Many factors led to those closures, but many people would argue that we need to maintain the IBA to continue to protect the service. If we do not take this action today, we could deprive Post Office Ltd of 38% of its income. In whose world does depriving an organisation of 38% of its income protect it and its viability? I ask the hon. Gentleman to think long and hard before he argues in favour of and supports the Bill this afternoon.

Those involved in the regeneration of deprived communities and who have considered the different levers available to Government to keep those communities going know that post offices are a critical part of the process. We should not—particularly not under any Government who would ever try to claim the word “progressive”—be undermining the regeneration of those communities and making the lives of individuals, particularly those in the greatest need, more difficult. I disagree with the Bill fundamentally and think that the privatisation of Royal Mail will critically undermine post office services, but if we do not take the opportunity offered by this new clause, not one of us could ever with any credibility stand outside a post office and campaign to save it.