Future of Postal Services

Ian Lavery Excerpts

Tuesday 10th January 2023 Westminster Hall

[Tahir Ali]

I agree with the hon. Member’s comments and I hope to cover that specific issue later in my speech. The longer interventions are, the less time other Members will get.

All Royal Mail deliveries were achieved in a way that satisfied most service users. Some 83% of residential customers said they were satisfied with Royal Mail’s service, while 79% of small and medium-sized enterprises said they were satisfied. That was all the result of hard work and sacrifice by Royal Mail staff, who increased the revenues of Royal Mail by a huge 40%, generating healthy profits of £758 million for the company in 2021.

However, £576 million of those profits were promptly paid out to shareholders, with the chief executive officer of Royal Mail, Simon Thompson, paying himself a massive bonus of £140,000. Let us pause for a minute and think about what that £570 million could have done if it had come into the Treasury. It could have contributed hugely towards money to pay nurses, doctors and ambulance drivers.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on securing this timely debate. He mentioned the chief executive officer of Royal Mail, Simon Thompson. Does my hon. Friend agree that if Royal Mail is to be sorted out for the future, which the CWU was trying to do, Simon Thompson has no place as chief executive officer?

[Tahir Ali]

I agree with my hon. Friend. Where a chief executive does not have the interest of the workforce at heart, they need to consider their position.

--- Later in debate ---

[Kevin Hollinrake]

We do not get involved in negotiations, as Royal Mail is clearly a private company. I welcome the fact that the CWU and Royal Mail are now sitting down with ACAS and trying to resolve the dispute. We should give that process time to reach a resolution. I understand that any strikes have been suspended until the outcome of those negotiations. As I say, the Government are not involved in negotiations because Royal Mail is a private company, but we will monitor the dispute closely, and urge Royal Mail and the Communications Workers Union to reach a resolution as soon as possible.

To ensure that consumers receive an adequate service, Royal Mail is required by Ofcom regulation to, among other things, meet certain performance targets relating to the delivery of universal service products. The regulator has the power to investigate and take enforcement action. Indeed, in 2020 it fined Royal Mail £1.5 million for missing its 2018-19 first-class national delivery targets. Ofcom investigated Royal Mail’s service quality performance in 2021-22, and in doing so considered evidence submitted by Royal Mail of

“exceptional events, beyond the company’s control”

that may explain why targets were missed. In that instance, Ofcom accepted that there had been a continued impact of covid-19 on Royal Mail service delivery, and concluded that

“it was not appropriate to find Royal Mail in breach of its regulatory obligations”.

However, Ofcom was clear that it does not expect covid-19 to have a continuing significant impact on service going forwards. It stated:

“We are concerned by the fact that Royal Mail’s performance in the early part of 2022-23 fell well short of where it should be. We believe the company has had plenty of time to learn lessons from the pandemic, and we are unlikely to consider the factors outlined above as exceptional and beyond its control in future.”

When it comes to renationalisation, we probably part company with many of those on the Opposition Benches who expressed views on the subject, including the hon. Member for York Central (Rachael Maskell), the right hon. Member for Islington North, the hon. Member for Birmingham, Hall Green, who sponsored the debate, the hon. Member for Llanelli (Dame Nia Griffith), and the hon. Member for Motherwell and Wishaw. I do not believe that renationalisation is the answer. Although there are undoubtably challenges facing Royal Mail, the Government are clear that renationalising the business is not the answer.

One of primary reasons for the sale was to enable Royal Mail to access the capital it needed to invest in and grow the business. When Royal Mail was independently reviewed in 2008 under the last Labour Government, we were told that it was underfunded and had not kept pace with equivalents around the world, which were 40% more efficient. Compare this to the present day: Royal Mail has invested over £2 billion in the UK business since privatisation, including £900 million over the last three years and £441 million in the last financial year in areas such as electric vans, two new parcel hubs, automation and improving its poorest performing delivery offices.

The hon. Member for Birmingham, Hall Green, mentioned the £576 million pounds distributed to shareholders. I point out that there are good years and poor years in terms of financial performance. In the first half of this financial year, I think Royal Mail declared a £219 million loss. That is in the marketplace, so it is not breaching any confidentiality.

[Ian Lavery]

Royal Mail made a £758 million profit, gave £567 million to shareholders and then, shortly afterwards—weeks afterwards—it said that it was making a loss of £1 million a day. The hon. Gentleman is a successful businessman. Would he not be asking questions?