Royal Mail

Ian Murray Excerpts

Tuesday 25th June 2013 Westminster Hall

[Ian Murray (Edinburgh South) (Lab)]

It is great to see you in the Chair again, Mr Davies. I pay tribute to my hon. Friend the Member for North Ayrshire and Arran (Katy Clark), who set out a compelling case for keeping Royal Mail in the public sector.

I also pay tribute to the Royal Mail staff, who have worked tirelessly alongside their management to create a leaner, fitter and more modern company. As we have heard, the recent results, with profits in excess of £300 million, are testament to not only the hard work of the staff, but the steely determination of management and staff working together, in partnership with the trade unions, to make the Royal Mail service the best it can possibly be. It would be wrong of me not to mention especially the Royal Mail staff in Edinburgh, who got the best performance stats in Scotland only last month, so I say congratulations to them.

As we have heard this afternoon, Royal Mail is a much treasured institution, with a universal service obligation covering all parts of the country—whether north, south, east or west—for one uniform price. It dates back to 1516, and I am sure that my hon. Friend the Member for Blaydon (Mr Anderson), who mentioned that, was there at the time. It touches all of us, whether through birthday or Christmas cards, letters to friends, bank statements or the Liberal Democrats’ “We’re winning here” letters—given that, no wonder delivery volumes are dropping. Royal Mail also happily delivers my letters to the Minister, six days a week at one uniform price. It is the last major publicly owned business, which is something that we should cherish and protect.

Royal Mail of course has challenges. Letter volumes are falling fast, as everyone turns to electronic communications. It has some way to go to complete the modernisation programme, to make itself the best it can possibly be. There is of course the risk of industrial action, given the industrial relations issues that we heard about in the CWU survey just last week. The maintenance of the USO is of course expensive, and the position of Royal Mail on delivering that USO is compromised by the ability of other companies to come in and cherry-pick the most profitable end-to-end services. One of the critical things, which has not yet been mentioned, is that Royal Mail service standards are much higher than the standards of any of the businesses coming in, which makes cherry-picking easier and, obviously, a lot cheaper.

There has been a lot of talk about the Hooper report, including by the hon. Member for Stourbridge (Margot James). That report, however, if we analyse what has been done since, shows that the company can be viable in the public sector. The issues raised by Hooper deserve a bit of attention. The pension fund assets have of course gone into the public purse, so the public purse is now responsible for the liabilities. In essence, having just nationalised the liabilities to the taxpayer, the Government now propose to privatise the potential profits. The regulatory environment has improved, following the transfer of responsibilities to Ofcom, and we have seen that in the deregulation of pricing, with the exception of second-class stamps; a lot of the profits over the past year or 18 months have been directly attributable to freeing up Royal Mail from some of those industrial strangleholds.

Furthermore, industrial relations and quality of management have improved. We must pay tribute to the management, the chief executive officer, Moya Greene, and the CWU for again working in partnership to ensure that industrial relations were improved and the modernisation programme taken forward. That was not an easy task for anyone, but they have come through it with aplomb, and the profits have helped. On the other side, the explosion of the parcel business, which was highlighted by the hon. Member for Angus (Mr Weir), has given a real opportunity for Royal Mail to become even more profitable. I am slightly disappointed that he did not tell us what the cost of a parcel or letter would be in an independent Scotland.

[Mr Weir]

rose—

[Ian Murray]

I will not be taking an intervention, because I do not have much time, but perhaps on the next occasion that we debate Royal Mail, the hon. Gentleman might come prepared with some of that information.

The environment therefore has changed since the Hooper report in 2008. That is why we should allow Royal Mail, under its new regulatory regime and its new environment, the opportunity to thrive in the public sector.

What is the real purpose of privatising Royal Mail? First, ideology—there is an ideological thirst for privatisation in the Government—and, secondly, to plug a hole in the Chancellor’s funding gap, because he is borrowing £245 billion more during this Parliament, owing to his failed economic policy. The fire sale of Royal Mail is the opportunity for him to plug that gap.

Let us analyse who is against the proposals. The late Prime Minister, Baroness Thatcher, the architect of ideological privatisation in the Conservative party, said that it would be a step too far. More recently, the Bow Group, a right-wing think tank to which the Minister might give much credence, said:

“It is likely to be hugely unpopular, prices will rise at a time when people cannot afford it, an amenity that many communities consider crucial will be removed, it will undermine the heritage of Royal Mail. The privatisation of Royal Mail is likely to move swiftly from a poisonous legacy for the Government now, to a poisonous legacy for the Conservative Party going forward”.

I would include the Liberals in that.

[Mr Tom Clarke]

Will my hon. Friend give way?

[Ian Murray]

I will not, if my right hon. Friend does not mind, because I have only 10 minutes and I want to try to give the Minister an extra minute to respond to my hon. Friend the Member for North Ayrshire and Arran. I apologise for not giving way.

In future, the privatisation of Royal Mail is likely to move swiftly from being a poisonous legacy for the Government to being a poisonous legacy for the Conservative party. That will include the Liberal Democrats, even though the Liberal Democrat manifesto was against the privatisation of Royal Mail—in fact, the Deputy Prime Minister spoke against it not that long ago.

We heard about the CWU consultative ballot this week, which produced a clear result from 96% of the very staff whom the Minister wishes to bribe with 10% of the shares. I hope that they are not shares for rights, which is a whole other subject for debate. Before the Minister jumps to his feet to say that the CWU ballot had a low turnout, it was some 78%, but this is not just about the posties. Unite, which represents a number of managers in Royal Mail, heard serious concerns expressed by management and senior management, who have also been saying that they have significant concerns about privatisation.

Concern about the rise in stamp prices has been expressed by the Countryside Alliance, the National Pensioners Convention and the Scottish Family Business Association, which are all becoming increasingly worried about the pace of the privatisation. The cross-party Business, Innovation and Skills Committee, which many Members present serve on, was also against the speed of the privatisation. Critically, the National Federation of SubPostmasters, which originally supported the Postal Services Act 2011 when it was going through the House, said that it no longer supports the separation of the two businesses and the privatisation of Royal Mail, because of the potential impact on the post office network. That includes the 10-year inter-business agreement and the £360 million a year that goes into the Post Office by having that inextricable link between the business and the delivery units. The Minister needs to address that and to let us know the impact on the post office network of the privatisation of Royal Mail.

If there is any doubt at all that the Minister does not believe the Countryside Alliance, the Bow Group, the late Baroness Thatcher, the CWU or Unite, why does he not believe himself? In February 2009, when in opposition, he said clearly in a letter reported in the press:

“I certainly do not support the…plans for privatisation”,

with reference to Royal Mail. Even with the Hooper environment getting better, the Minister now says that he is not against it. He might pop to his feet to say, “That is because we’re giving 10% of the shares to the staff,” but if that is the justification for changing his stand from being against privatisation to fully privatising Royal Mail, it is a weak argument.

The Government have also failed to address a number of critical issues with regard to the justification for privatisation. On the timing of the sale, why now? I claim that it is because the Chancellor needs the money in his Budget come April next year. I hope that the Minister can dispel that myth. The hon. Member for Gosport (Caroline Dinenage) said that Royal Mail has to compete with schools and hospitals and everyone else for public money. It does, but the future profits of Royal Mail could be building schools and hospitals and every other piece of infrastructure that this country might put together. Public services are not always a drain on resources; a profitable Royal Mail could contribute to the Government’s resources, to build schools and hospitals.

There are unresolved competition issues and questions about what happens if the Royal Mail falls into trouble in the regulated environment. The USO is expensive and the most profitable parts could be cherry-picked by other end-to-end deliverers, so that it might become unaffordable. What happens then? Does it revert back to the Government and the public purse, as happened with the east coast rail line, which my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) mentioned, with the company handing back the keys? This is a huge issue, and there is an impact on customers and the post office network. If all that is put together, the strongest compelling case is to keep Royal Mail in the public sector, and that is what we will fight to achieve.