Postal Services Bill

Gregg McClymont Excerpts

Wednesday 27th October 2010 Commons Chamber

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It was enlightening to discover that the father of the hon. Member for Witham (Priti Patel) was a sub-postmaster. I understand that her great hero was the daughter of a shopkeeper. Let me suggest that the style that she has adopted is somewhat similar.

We have heard a lot today about the Post Office and the implications that the privatisation of Royal Mail will have for it. In most countries, collection and delivery services, as well as the network of post offices—that is, the universal service obligation—are protected by statute. That is the case in the United States of America, and in the two countries with the most successful mail companies in the world: Netherlands and Germany. The detailed rules in Germany are as follows. There must be a post office in each community, designated a “local centre” by planning regulations. There must also be a post office in each community of 4,000 inhabitants. In urban areas, customers must be no further than 2,000 metres from a post office, and in areas not otherwise covered, a mobile service must be provided. In effect, those rules mean that Deutsche Post must keep open a minimum of 12,000 post offices.

The Bill contains no specific criteria regarding post office numbers. That would not have mattered, had an integrated mail and postal entity remained in state ownership. I say that because despite what the Secretary of State said earlier, it is indeed the case that the relationship between Royal Mail and the Post Office was structured by Government ownership. Of course it was: it was structured by the criteria that the Government set and under which those two entities existed. Let me be clear: there is no requirement in the Bill for any mail company to use the existing post office network. If Royal Mail ceases to use the full postal network, the Post Office will be bankrupt.

Predictably, and in order to deflect attention from that question, the Government have today announced what seems to be a large subsidy, although I would caution hon. Members on both sides of the House about that. The devil will be in the detail, because not only does the £1.3 billion announced cover the entire period of the spending review, but there is no assurance that all the money will go on a subsidy. As my hon. Friend the Member for Walthamstow (Stella Creasy) said, the money could be used for restructuring or other management costs.

In the end, there is no substitute for sound protection of the network through regulation. It would be dangerous in the extreme to make the post office network solely dependent on the tender mercies of the Treasury. What the Government propose is a structure that puts the long-term future of the Post Office in grave danger, with the faultline concealed by the creation of a short-term subsidy. What the Minister is doing, when one dispenses with the smoke and removes the mirrors, is putting in place a policy that, down the line, will facilitate the shutting of post offices. That will happen at a point in the not-too-distant future, when the Treasury’s munificence is withdrawn.

I said earlier that most countries had statutory rules protecting the number of post offices. Until now, there has been one notable exception to that rule: Sweden. Sweden adopted plans that bear some resemblance to those advanced by the Minister. The National Audit Office passed the following harsh judgment on the practice in Sweden, saying that

“its attempts to reform its post offices network were drastic, poorly thought out, and initially were most unpopular. It is clear that”

the Swedish postal service

“was acting freely and without government interference until the unpopularity of the changes introduced in 2000 onwards became apparent. At this point political pressure was brought to bear.”

I do not know which management consultants the Swedish Government consulted, but I do know from the Wikipedia entry for the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey) that he spent his career before he became an MP privatising mail services around the world. When I last debated the issue with him, he refused to engage with these detailed questions. I now know that that is not because he did not understand them. Might it be because the Treasury is insisting that the long-term demise of 7,000 rural post offices is a price that must be paid to ensure that the equity price for Royal Mail remains high?