Postal Services (Rural Areas)

Debate between Ian Murray and Alan Reid

Monday 2nd September 2013 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

I thank the Backbench Business Committee for selecting the debate. I especially thank my hon. Friend the Member for North Ayrshire and Arran (Katy Clark), who has been dogged over many years in speaking against the privatisation of Royal Mail and pointing out its impact on her rural constituency. I hope that hon. Members will forgive me if I do not mention everyone who spoke because time constraints mean that we must rattle through the debate.

With perhaps only a few weeks to go until the Government hammer the final nail in the coffin that will seal the privatisation of Royal Mail, this has been a crucial opportunity to debate the impact of that policy on rural communities throughout the country. Such communities have already been hit hard by the Government. Whether through their astonishing abolition of the Agricultural Wages Board without a debate in the House or their inaction on rising travel and fuel costs, or with the disproportionate effect of the cost of living crisis on rural communities, the Government have been found wanting, and we now have the ideologically driven fire sale of Royal Mail to save the Chancellor’s blushes. It is only a few months since the rural economy index concluded:

“Rising unemployment, shrinking profits and plummeting confidence in countryside businesses has thrown the rural economy to the brink of a further recession”.

There is a fear that the privatisation of Royal Mail and other changes to postal services will accentuate that decline.

We should praise postal workers throughout the United Kingdom for their work. They get important mail and items to families and businesses up and down the country come rain, hail, shine or snow. We should especially thank those workers in the most remote parts of the country, which is why the motion is right to cite the

“vital contribution that Royal Mail makes to rural areas”.

Royal Mail’s profits, which are in excess of £400 million, are a testament not only to the hard work of its staff, but to the partnership of management and staff working with the trade unions to make the Royal Mail service the best that it can be.

The universal service obligation of one price anywhere, six days a week, gives equity to rural areas and supports rural economies. We have only to look at the inequity of pricing for delivering parcels to certain remote areas, which many hon. Members cited, to see the potential for rural economies to be hit hard should the USO principle be undermined.

The social aspect of the post office network in rural areas is critical. Post offices act as a focal point for communities and provide a vital service, especially for older people, as my right hon. Friend the Member for Neath (Mr Hain) said. Of course, they are also important to the small businesses that use our postal services.

There are undoubtedly challenges, given that letter volumes are falling drastically and maintaining the USO is expensive. However, the maintenance of the USO is at the crux of the debate. The Government cannot guarantee either the USO or the inter-business agreement with the Post Office because they have no real control over rival end-to-end operators cherry-picking more profitable services, which in turn makes delivering the USO more expensive. A more expensive USO puts pressure on a privatised Royal Mail to cut costs, and the most expensive parts of its business are its rural operations.

Neither the Minister nor the Royal Mail can tell us what will happen if everything goes wrong. If the USO becomes too expensive to deliver or if the privatised Royal Mail just hands back the keys to the Government, as the private companies did when their contracts failed on the east coast rail line, what will happen? The taxpayer will pick up the tab. The situation is compounded by the fact that the Royal Mail has much higher service standards than rival deliverers. It therefore faces higher standards that are more expensive to deliver, and pressure on its most profitable parts from rival companies operating under lower service standards and employing staff under worse working conditions, as my hon. Friend the Member for North Ayrshire and Arran said, to make their services cheaper still. Combined with that is an ever-more expensive USO, pressure on the inter-business agreement with the Post Office and the fact that the Government have no strategy on how to protect the USO in the long term. Then there is the big question of the EU directive, because will the UK be in the EU? Does the Prime Minister want to repatriate in this area, and will that create further uncertainty about the universal service obligation? This is a recipe for disaster, and the effects will be hardest felt in rural areas.

It would be naive to think that any new owner of a privatised Royal Mail would not aim to maximise shareholder value. That will put pressure on reducing costs and on services that might be considered uneconomic, such as reaching remote areas. Rural businesses might well have to pay more to have their mail delivered, while getting parcels from online retailers could come at a premium for householders. We have heard that a survey by Citizens Advice Scotland found that 84% of people living in the remotest parts of Scotland have been refused delivery by a non-Royal Mail carrier.

The importance of the post office network to rural communities is shown by statistics from the National Federation of SubPostmasters saying that 55% of post offices are in rural areas and that 31% are the only retail outlet in some areas. As the hon. Member for North Cornwall (Dan Rogerson) said, such post offices are often how rural communities access the wider world. The post office network depends on Royal Mail for more than 30% of its income, so we can see why there are considerable concerns that the 10-year inter-business agreement will fall. First, it was included in the Postal Services Act 2011 only after Labour and stakeholder pressure. Secondly, it can be reviewed in five years and, thirdly, it can be altered if there are material adverse effects on either of the two companies. It is a vital link in the sustainability of the post office network.

The Post Office is in a precarious position. A recent survey by the National Federation of SubPostmasters found that operating costs were rising; personal drawings for sub-post masters had fallen by 36% in four years; one in four sub-postmasters took absolutely no salary from their post office income; and most sub-postmasters earned little or no income from financial or Government services—the two areas that Ministers identified as having “real growth potential”. Most importantly for this debate, the Government have completely failed to deliver their pledge to make the post office the “Front Office for Government”. Do hon. Members remember that mantra? That has resulted in the NFSP withdrawing its support and saying that the privatisation of Royal Mail could fundamentally impact on the viability of the post office network, as it has become increasingly dependent on Royal Mail for business.

Then there is the impact on rural areas of the roll-out of the Post Office Local programme. Groups such as Consumer Focus—now Consumer Futures—say that there is a lack of analysis by the Government on how the programme will ultimately work. The Countryside Alliance is concerned that the model could result in many rural communities losing their post office or seeing further cuts in services such as manual cash deposits and withdrawals, manual bill payment services, and on-demand foreign currency. That is particularly worrying, given that the NFSP has shown that 43% of older people in rural areas use the post office to access cash.

[Mr Reid]

I am pleased that the Labour spokesperson is speaking up for rural post offices, because thousands of post offices were closed under the last Government. We are not going to take lectures from Labour on saving rural sub-post offices, given the thousands that they closed.

[Ian Murray]

The day I take lectures from a Liberal Democrat in the Chamber is the day I leave the Chamber in utter shame. The key thing that the hon. Gentleman tends to forget is the fact that privatisation of Royal Mail will signal the final nail in the coffin for the post office network. The Government can trumpet mutualisation as much as they want, but the fact that they have kicked it into the long grass until 2016 shows how undeliverable it is. Why on earth are the Government talking about mutualisation for the post office, but are hellbent on privatising Royal Mail? Those two things are just not compatible.

By continuing to pursue a policy that is ideologically driven, quite simply, Ministers and the Government are playing politics with the postage stamp. Let us be quite clear: this has nothing to do with postal services or the impact on the public, but is meant to save the blushes of a discredited Chancellor. Why are the Government not listening to the voices of the coalition of opposition, as mentioned by my hon. Friend the Member for Clwyd South (Susan Elan Jones), including the Countryside Alliance, the National Pensioners Convention, the Scottish Family Business Association, the National Federation of SubPostmasters, the Conservative right-wing think tank, the Bow Group, the cross-party Select Committee on Business, Innovation and Skills, and even the late Baroness Thatcher? A recent survey by the Communication Workers Union showed that 96% of Royal Mail staff were against privatisation on a massive 76% turnout, despite the Government bribe to give them shares. If the Government do not want to listen to all those people, why does the Minister not listen to her colleague, the right hon. Member for Sevenoaks (Michael Fallon), who took responsibility from her to privatise Royal Mail in the recent ministerial reshuffle? He said in a letter to the CWU on 11 February 2009:

“I certainly do not support the...plans for privatisation.”

Why does that Minister not even listen to himself?

The British public, who are against privatisation 2:1, recognise that, and the Liberal Democrat manifesto—remember that document?—recognises it. The weakness of the Government’s case is absolutely clear. I say this quite seriously: Government Members who represent rural constituencies should think carefully about privatisation of Royal Mail, which they support, and how it will affect not just their constituents but the businesses in their constituencies that rely heavily on the post office network. Rural areas, more than most, rely on our much-cherished postal services. The overwhelming case is to keep Royal Mail in public hands and protect postal services for all our communities.