Postal Services Bill

Huw Irranca-Davies Excerpts

Wednesday 27th October 2010 Commons Chamber

[Vince Cable]

I shall come to the argument for not restricting private investment access in a moment. The simple point is that without private investment we will not get the capital investment that the Royal Mail needs to modernise. That is a simple argument, but I will develop it at length.

[Huw Irranca-Davies (Ogmore) (Lab)]

rose—

[Kate Hoey (Vauxhall) (Lab)]

rose—

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[Vince Cable]

I shall take the hon. Lady through the arguments step by step, but the situation has deteriorated badly. I think that she lost seven post offices in her constituency, so she will know that the situation is not satisfactory and that the status quo cannot be maintained.

[Huw Irranca-Davies]

rose—

[Vince Cable]

I shall take further interventions later but I want to proceed with the next step of the argument.

Let me dwell a little on Royal Mail’s financial problems. When I came into government I was left in no doubt as to the real difficulties. I asked Richard Hooper to update his report from December 2008 because I wanted to ensure that the conclusions were still valid—and they are. Let no one in the House be under any illusion regarding Royal Mail’s predicament. I recognise that there has been some progress. Opposition Members who represent areas with sorting offices will know that unions and management are now working together better—we acknowledge that—but that the pension deficit has ballooned. It is now more than £8 billion and Royal Mail has, proportionately, the largest pension deficit of any major company in the United Kingdom. In addition, it loses almost £1 million a day on its trading activity. It is an inefficient business in a market that is declining faster than anyone predicted. Hooper now forecasts that letter volumes could fall by as much as 40% in the next five years if nothing is done. That is why we are moving further and faster.

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[Vince Cable]

I assure my hon. Friend that will be the case. My colleague the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), who has responsibility for postal services, will spell out later today and in Committee exactly how the process will operate. My hon. Friend is right: at present the deregulation provisions do not give the Royal Mail sufficient protection against unfair competition. We want to make sure that there is more protection in the deregulation process.

[Huw Irranca-Davies]

Will the right hon. Gentleman give way?

[Vince Cable]

I shall take one more intervention before I move on.

[Huw Irranca-Davies]

I thank the right hon. Gentleman for giving way; I do not know why he was so reluctant to take my question earlier.

I do not have an ideological argument with the Secretary of State. My point is about the argument that he has failed to address. Why is full privatisation needed, rather than the proposal that we put on the table? He has not addressed that point. It is not Red Huw from Ogmore making this argument, but the large majority of Liberals. Conservative voters are saying the same thing: why full privatisation?

[Vince Cable]

The hon. Gentleman is right to say that this is not an ideological question. I shall come to the share sale issue shortly, but I have no ideological stance on it. I see a role for public ownership in certain circumstances: I think I was ahead of most Opposition Members in pursuing public ownership of the banks during the crisis. There is a role for public ownership in certain circumstances, but this happens to be a case when it serves no useful purpose, and we are quite prepared to adopt a pragmatic approach to get the best provision for Royal Mail and the universal service, and the best value for the taxpayer. We have no ideological hang-ups, and I am glad that the hon. Gentleman does not either.

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[Vince Cable]

I have taken a substantial number of interventions and I want to proceed.

I know that these proposals mean setting out on a new course, and that before any changes can be made the network will have to be put on a secure financial footing. Subject to consultation, it is the right outcome for the network. I hope the Post Office can make the transition before the end of this Parliament.

Let me further reassure the House about how we shall put the Post Office on a more secure financial footing.

[Huw Irranca-Davies]

rose—

[Vince Cable]

I will take interventions at the end of the next section of my speech. I have already given the hon. Gentleman answers to some of his questions.

Communities up and down the country have rightly been concerned about the shrinkage of the network over previous years, and despite the efforts of Opposition Members—notably the shadow Chancellor—there has been remorseless decline over the last three decades. The previous Government’s closure programmes shut 5,000 post offices. I commend Members on both sides of the House who fought against those closures. Those days are over. I echo the words of the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) from some years ago:

“We had a choice. One was to continue to watch decline turn to crisis and crisis turn to collapse, leaving it as someone else’s problem down the road.”—[Official Report, 15 February 2000; Vol. 344, c. 870.]

This Government do not believe in passing on the problem, so we shall fund the post office network, and when I say “fund” I do not mean setting aside millions to buy off sub-postmasters when we close their business.

The option of keeping the network on a care and maintenance basis and letting it decline is one we have rejected. I can today announce £1.34 billion of new funding for the Post Office over the spending review period. The funding will be used to reform the current network, to change the underlying economics, and so reverse the years of decline and secure its long-term future. I am grateful in particular to the Chief Secretary to the Treasury for his understanding, even in a tough spending round. I repeat, there will be no programme of closures under this Government and the Post Office will be able to invest, improve its offer and win new revenue streams.

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[Vince Cable]

Yes, indeed. That is the outcome. For the past decade I and many on the Opposition Benches have been involved in fighting for our local post offices. In many cases, constituencies have seen the loss of a dozen post offices. That will come to an end.

[Huw Irranca-Davies]

On that very point, I am grateful for the clarity of the right hon. Gentleman’s response, although the figure seems less than the support that the Labour Government put into the post office network. An individual in my constituency has just successfully kept a branch open with the investment of tens of thousands of pounds of his own money, as well as funds from the Welsh Assembly Government and some Post Office Ltd money. Will he be an independent trader under the umbrella of Post Office Ltd, or some sort of commercial, co-operative, mutual whatever? He has just put a lot of money in, and the Secretary of State does not seem to be clear.

[Vince Cable]

I am surprised to hear Opposition Members speaking against mutualisation and co-operation. I thought that was at the heart of the Labour movement’s values. We will consult on how, in practical terms, the post office network becomes a mutual structure. I made that clear. By shifting us into the structural arguments again, the hon. Gentleman is taking away from the considerable importance of the announcement that has just been made, which is that the process of remorseless and endless closures—I think he has had seven in Ogmore—is going to come to an end.

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[Huw Irranca-Davies]

On a point of order, Mr Deputy Speaker. The right hon. Gentleman is spraying around statistics on post office closures and, once again, he is getting them wrong. I realise that I may be out of order, but that is unforgivable.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Let us clear this up. We both know that that is not a point of order. Many hon. Members want to speak. Spurious points of order do not help the Chamber. We need to get on with the debate. We may have a chance for everybody to put their opinions afterwards.