Postal Services (Rural Areas)

Huw Irranca-Davies Excerpts

Monday 2nd September 2013 Commons Chamber

[Katy Clark]

I am grateful to the hon. Gentleman for his contribution. As he will be aware, however, organisations such as the National Federation of SubPostmasters believe that what the Government have done is inadequate to ensure the future of our post office network, and I suspect we will be exploring such issues in today’s debate. I also recognise that he, too, has a very rural constituency and that this debate is of as great importance to his constituents as it is to mine.

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

I congratulate my hon. Friend on securing this important debate. Does she recognise that the link between Royal Mail and individual post offices is crucial? We talk about “rural post offices”, but in my constituency, which borders the M4 and is a former coal mining constituency, all but three of the post offices are part of the rural network.

[Katy Clark]

My hon. Friend makes an incredibly important point, one that has been made to me by many who run post offices in my constituency.

The post office is vital, not only for individuals, but for many rural businesses—that is another point that many people in my constituency have made. I believe that those who work for Royal Mail have a strong public service ethos. They provide a vital service in many parts of the country, and in rural areas nobody else is going to provide it. There are real concerns about the impact that the privatisation of Royal Mail will have on not just Royal Mail itself, but our post office network. I suspect that many issues associated with that will be explored in this debate by many hon. Members from all political parties.

The background to this debate is, of course, the Postal Services Act 2011, which was passed by this House and allows not only for the privatisation of Royal Mail, but for competition for postal services. The Government have not, as yet, specified what form the sale of Royal Mail will take—whether it will be an initial public offering or a sale to private equity—although they have said that an IPO is their preferred method of sale. There is a great deal of concern throughout the country that the Government are rushing their timetable for political reasons. They have said that the sale will take place within the 2013-14 financial year. If that is the case, we will be hearing further details on the privatisation very soon.

The Government have framed their argument for privatisation in such a way as to suggest that Royal Mail is in imminent danger and that privatisation is the only solution, but that is not the case. Royal Mail is doing very well at the moment, and profits more than doubled in the past year, to more than £400 million. That is partly because the Government have taken over the assets and liabilities of Royal Mail’s pension scheme, saving the company £300 million each year. I congratulate the Government on taking that step. Of course Royal Mail needs access to capital for investment, but the urgency of the Government’s case seems to be driven more by a political timetable. There are many ways to get access to capital. For example, Network Rail is a public body that is authorised to access private capital, without affecting Government borrowing. This House has the right to expect the Government to look at other ways in which Royal Mail could get this access without going down the privatisation path.

The privatisation path is deeply unpopular, with not only the public, but Royal Mail staff. When the Communication Workers Union consulted its staff, it found that 96% opposed privatisation. Unite, which represents managers in Royal Mail, has also come out strongly against privatisation. The National Federation of SubPostmasters was originally sympathetic to some of what the Government were saying but it is now calling on them to halt the privatisation of Royal Mail, because of what it says is the Government’s failure to provide new work to post offices. In the briefings that it has been providing to Members throughout the country, which have been given to me by my constituents and when I have visited post offices over the past few days, the NFSP says that no new work has been awarded to post offices since May 2010 and that the new services that have been introduced are one-off transactions available only at a small number of post offices. It says that without the promised new Government work Post Office Ltd and individual post offices do not have a viable future and that a close relationship with Royal Mail is vital and will be jeopardised by privatisation.

One reason people are so opposed to privatisation is the fear that the universal service obligation will be under threat. The affordable six days a week service that is so valued in the United Kingdom is expensive to provide, particularly in rural areas. Rural post offices and rural postal services are most vulnerable because they are the most costly, and private parcel delivery companies routinely charge a high premium for delivering to remote or rural areas or to islands—or simply refuse to deliver at all.

A report by Citizens Advice Scotland in 2011 found that 83.8% of people surveyed living in remote parts of Scotland had been refused delivery altogether by a retailer using a carrier other than Royal Mail and that increased charges are normal. That is, of course, a problem not just in Scotland but throughout many parts of the UK.

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[Dan Rogerson]

The hon. Lady made good points about employment practices, which I think will be of concern to people looking at employment in that sector. However, we are talking about the universal service obligation, and we will probably not find TNT falling over itself to provide alternative services in many areas of the rural network that we are talking about. I am confining my remarks primarily to the rural network, although I accept what she says about zero-hours contracts, which is a debate for another time.

[Huw Irranca-Davies]

rose—

[Dan Rogerson]

Let me make a little progress and then I will give way.

I was listing the sorts of approaches that people have taken. In my constituency, the community at St Eval was shaped by RAF and Royal Navy housing, and Trevisker probably would not have been built were it not for the service community. That community has now largely left, and the MOD shut down buildings, took away the old NAAFI and so on, which put the post office under threat. Again, the community came together and put forward a good proposal with Cornwall council. It now has a lease on one of the former United States navy buildings to keep those services in the community. That is vital and we are looking to the future of those services as the buildings get sold off. Hopefully such proposals will play a part in shaping the future of that community.

Interaction with other services is also important. A lot of villages may have a small school that is clinging on, although there are of course pressures regarding the viability of such schools, which we all want to protect. The village pub may also be under threat, and those services support each other. If families come to collect children, they might go into the post office at the same time, or if they are going to the shop they might also go into the pub. Such things all support a viable set of services and businesses in the area, and the post office plays a big part in that.

Post Office Local provides an exciting opportunity for many businesses, and a new way of securing the future viability of the service. In some places, however, the sub-postmaster is looking to sell the business, and there is a concern that if they can sell it only as a local, finding a buyer may not prove such an easy prospect. We must get reassurance on that issue to ensure that in villages where a lot of community support has gone into the business, those gains are not lost as the post office moves to the local model.

Much of the motion is about postal services and it is right that the House debates such issues as we are the guarantors of the obligation to provide that service across the country. I was struck by the comments of the right hon. Member for Neath (Mr Hain), who mentioned Royal Mail’s applications to vary some of those conditions, and that the regulator, through discussion and consultation, had decided that that was not the way to go. I do not necessarily think that whether those services are in the private sector—in whatever form—or in the public sector is the ultimate guarantee. That is for us in this House to provide, and the universal service obligation is now protected in law. On the variation of those conditions, we have a prominent role in consultations on whether such things should be changed.

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[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I congratulate the hon. Members for North Ayrshire and Arran (Katy Clark) and for Angus (Mr Weir) on securing this debate on the future of postal services in rural areas, for which the Backbench Business Committee has found time. The hon. Lady mentioned in her opening remarks that there have been particularly strong representations on the issue from parts of Scotland. It is lovely to return to these issues, as just a few weeks ago we had a good debate in Westminster Hall on the future of postal services, particularly in Scotland. I welcome the opportunity to respond to some of the issues raised this afternoon.

I will try to address as many as possible of the points made during the debate, focusing especially, as has much of the debate, on Royal Mail and the universal service, particularly in the light of the forthcoming privatisation. It is important to scotch the myths that have grown up during some of the speeches in this debate. I will also make sure that my remarks focus on the future of the Post Office because postal services relate not just to the delivery of letters and parcels, but to the wide range of postal services provided through the post office network.

[Huw Irranca-Davies]

I thank the hon. Lady for giving way so early. In scotching one of those myths, could she deal at the outset with the issue of the Liberal Democrat manifesto, which stated:

“49 per cent of Royal Mail will be sold to create funds for investment. The ownership of the other 51 per cent will be divided between an employee trust and the government.”

Is that an accurate reading of the manifesto, and is that what the Government are proposing?

[Jo Swinson]

The hon. Gentleman is obviously an avid reader of the Liberal Democrat manifesto, perhaps unlike his hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann)—