Royal Mail

Ian Murray Excerpts

Thursday 12th September 2013 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

I thank the Minister for his statement and for coming to the House today, following his intention-to-float announcement to the stock exchange this morning. Let us start by putting on record our thanks to all the staff at Royal Mail for all that they do, and for their dedication to delivering the mail, come rain or shine, to all parts of the country. Royal Mail is a much-cherished national institution.

The case for the privatisation of Royal Mail has not been made. Its recent annual profits were more than £400 million and we should be allowing it to flourish in the public sector, but the Minister has told the stock exchange today that he will sell a majority stake in the company, on a shortened timetable. He is pushing ahead with this politically motivated fire sale to fill the hole in the Treasury created by George Osborne’s failed economic plan.

This decision will have significant impacts on consumers, businesses and communities up and down the country. The Government are pressing ahead with the fire sale of Royal Mail despite having failed to answer critical questions on the six-days-a-week, one-price-goes-anywhere universal service obligation. The Minister has failed to ensure the long-term maintenance of the USO. He claims that it is written in legislation, but I am sure that he can envisage a scenario in which a privatised Royal Mail comes to the Government and asks for alterations to that legislation.

Why is that a realistic scenario? It is because the regulatory environment does not prevent the cherry-picking of the most profitable parts of Royal Mail by rival companies that operate under much lower service standards than Royal Mail. If the USO becomes unsustainable, the Government will have no choice but to alter it. Royal Mail will still have to deliver daily to Shetland while its rivals enjoy providing services in London, Manchester, Liverpool, Edinburgh and other profitable centres. Pressure will be put on the Government to respond to such requests to alter the USO; otherwise, what is there to prevent the privatised Royal Mail from handing back the USO keys, just as we have witnessed with the east coast main line? The result will be that the taxpayer will, ultimately, pick up the costs.

Concerns have been expressed about higher prices. Other privatised companies have already set precedents in that area. One of the questions posed in the Government’s documents today is whether the Post Office will be affected. The Minister says no, but the 10-year inter-business agreement can be reviewed in four years, and it can be altered if there are material adverse effects on either of the two companies. How can the Minister say that this privatisation does not affect the post office network? A privatised Royal Mail will want to look closely at costs, and that £380 million annual contract could be a good place to start.

The National Federation of SubPostmasters tells us that the privatisation of Royal mail threatens the future of the post office network and, as a result, it now opposes the privatisation. It has called it a “reckless gamble”, and we should listen to what it says. It is not only the NFSP that is against the move. Despite the £2,000 shares bribe to the staff of Royal Mail, a massive 96% of them voted against the privatisation, on a turnout of over 75%. Moreover, they already own the company. A poll in The Sunday Times last week showed 70% of the public to be against it, and former Prime Minister Baroness Thatcher, the architect of privatisation, said that it was a step too far. The Bow Group, a right-wing Tory think-tank, said that it would be deeply unpopular and should not be considered. A vast coalition of groups and organisations echo the concerns about prices, the maintenance of the USO and the impact on the Post Office. And the Minister himself said in a letter in 2009 that he was against the privatisation of Royal Mail. The problem is that the Government cannot see the wood for the ideological trees.

Let me ask the Minister four questions. He said in his statement: “Changes to the universal service’s minimum requirements, which include free services for the blind and services to urban and rural areas alike, can be made only by affirmative resolutions in both Houses.” Would that involve primary or secondary legislation, and would such legislation be dealt with on the Floor of the House or in Committee? Secondly, in what circumstances can he envisage the USO being revised? Thirdly, what assurances can he give us that the inter-business agreement with the Post Office will not be removed or revised? Fourthly, when will the prospectus be drawn up and made available? This is the largest privatisation since that of British Gas. The Government are playing politics with the Queen’s head, and they should think again before it is too late.

[Michael Fallon]

I do not think that we can legitimately be accused of conducting a fire sale, given that the previous Government were proposing to privatise the company four years ago. The process has hardly been rushed. A lot of people were against that sale; it was a half-baked sale and almost every Labour MP was against it, which is why it was abandoned.

I have already made it clear to the House that the universal service obligation is laid down in statute. It can be changed only by Parliament, and we have no plans to ask Parliament to change it. I can give the hon. Gentleman an absolute assurance in that respect. He asked me about the minimum requirements of the service. They can be changed by affirmative resolution, which would involve secondary legislation. We have no plans to alter those requirements. They will be properly policed by the regulator and will apply irrespective of any change in ownership. The price of stamps is also regulated. The price of a second-class stamp is capped by the regulator, and we have no plans to change that position either.

The hon. Gentleman asked me about the relationship between the Post Office and Royal Mail. They are natural partners in the delivery business, and it is unthinkable that they would not seek to work closely together. They have done more than that, however. Last April, they signed a 10-year commercial agreement to provide for the two businesses to work more closely together.

We heard nothing from the hon. Gentleman about what a future Labour Government would do. It seems extraordinary that, four years on, the Opposition still have not worked out a policy. Even now, they cannot say whether Royal Mail should be public or private; they cannot make up their mind whether they would renationalise the company if there were ever to be a Labour Government again.