Jack Dromey
Main Page: Jack Dromey (Labour - Birmingham, Erdington)
Lorely Burt
I welcome the Lords amendments that we are considering today. They are an indication of the way in which the Government and the Opposition can work together, because the Government have obviously listened to the constructive suggestions made by Members on both sides of the House. There is a great deal of consensus; I believe that the amendments went through the other place without a Division. That goes to show just how well things can work when everyone is minded to make that happen.
On the subject of shares going to employees, when I wrongly tried to intervene on the hon. Member for Llanelli (Nia Griffith), I was going to point out that it is not 100% of the company that is being sold off to private interests: it is actually 90%, and 10% will go to the employees. The benefits to those employees will be huge. The Bill recognises the importance of the work of the conscientious postman or woman who keeps the post coming through the letterbox six days a week, come rain or shine, and the importance of the work force to the success of the company. The proposals will offer real benefits to the employees.
I greatly welcome the fact that the pension plan members will be protected and that the subsuming of the pension plan is being brought forward. That will give tremendous reassurance to prospective pensioners in Royal Mail. Perhaps most importantly, and despite the disagreement of the Opposition, we are securing the future of the company. The worst thing would be for the Government to do nothing, which would allow Royal Mail to decline and fall. It is an unfortunate fact that, under the previous Government, 65,000 Royal Mail employees lost their jobs and 7,000 post offices were closed. The future of the post office network is now secure. I also greatly welcome the proposal for a vote before mutualisation. That will put in place important protections.
I should like to ask my hon. Friend the Minister a few questions. Does he think that I have understated the benefits for employees? Can he think of any others? Can he give me an assurance that the universal service obligation will be properly protected? Has he had any discussions with representatives of the Communication Workers Union, and, if so, what do they think about the proposals?
Jack Dromey (Birmingham, Erdington) (Lab)
It is important that, when we come to the House, we should reflect the feelings of our constituents. I should therefore like to tell two stories. First, just before Christmas, I visited the local postal sorting office at Sutton New road. I spoke to each of the excellent men and women there. They told me how they had worked there for 10, 15 or 20 years. Some had worked there for 25 years. They work in all weathers to provide an outstanding service to the people of north Birmingham. They felt bitter about what they regard as a betrayal of their loyal service to the country.
Secondly, I want to tell a story not so much about a local post office as about a local entrepreneur who wants to reopen a post office. We have in Perry Common a community well served by the Witton Lodge community association. That community has backed an individual who now runs the local grocery shop—it used to be a sub-post office—and he wants to reopen that post office. Through me, he has approached both the Post Office and the Government for support, only to have it declined. If I may, I will return to that matter at the conclusion of my remarks.
Madam Deputy Speaker (Dawn Primarolo)
I might be anticipating what the hon. Gentleman is going to do, but may I remind him that these Lords amendments are quite specific, so he needs to focus his remarks on them? Perhaps he was just about to do so.
Jack Dromey
I was just about to do so, Madam Deputy Speaker, but like the Minister, I embarked on some historical anecdotes, as the Post Office is very proud of its history.
There is a simple inescapable reality, which is that the Post Office is dependent on Royal Mail’s business. A third of its revenue—£334 million—and a third of sub-postmasters’ pay—£240 million—is generated by selling Royal Mail products and services. The Bill does not safeguard on a continuing basis the inter-business agreement. The Government will not undertake to extend the current five-year guarantee to 10 years. Key stakeholders recognise the importance of making a longer commitment on the IBA. Let me cite what Consumer Focus said in its evidence to the other place:
“There are few safeguards to keep that contract for the long term. It’s entirely conceivable—though it seems an odd thing to suggest—but several years down the line you could have a post office network where you cannot undertake mail transactions. It would be for Royal Mail to determine which operator—whether it was Post Office Ltd or Tesco or whomever—to offer mail services and there would be no requirement for stamps or parcels.”
It continued:
“You could see a scenario where Royal Mail looked to cherry pick so Tesco, say, could meet its requirements in urban areas and the Post Office would pick up the slack in rural areas where there isn’t anybody else. And that has very serious implications in terms of the viability and integrity of the network because urban areas typically make money.”
Consumer Focus went on to argue that the number of post offices could fall by 37% as a consequence of these measures—from the current level of 11,900 to the minimum number consistent with the Government’s access criteria of 7,500. In Birmingham alone, seven post offices face closure.
The National Federation of SubPostmasters has added its call to the need for action. It also argues for a minimum 10-year IBA. Let me quote what it says:
“The NFSP believes that in order to avoid further post office closures, existing levels of Royal Mail work at post offices must be maintained with a minimum 10 year IBA between the two companies following separation.”
The Government’s stance is clear, albeit sad. They have rejected a number of opportunities to make the commitments that have been called for.
Fiona O'Donnell (East Lothian) (Lab)
Is my hon. Friend aware of the recommendation in the Select Committee on Scottish Affairs report that the Government should be doing more to remove the barriers to local post offices providing services in relation to devolved and local government?
Jack Dromey
To develop our post office network, it is necessary to be imaginative and creative. Sadly, we are moving in the opposite direction.
The Government’s stance could not be clearer. They have rejected a number of opportunities to make the commitment firm in this important legislation. They have declined to accept a statutory commitment, as exists in countries such as Germany and the Netherlands, to a figure of 11,500. They have rejected the embedding in the Bill of the access criteria on how near people’s local post office will be. Post offices locally cannot live on warm words alone; good intentions and high hopes mean naught if we cannot have guarantees for the future.
Lorely Burt
Will the hon. Gentleman refresh my memory on how many new post offices were created under the Labour Government? Was there not a net decline, or managed decline, of the Post Office amounting to 7,000 post offices. Why does he decry the fact that this coalition Government are doing all they can to preserve and enhance the post office service that we have inherited?
Madam Deputy Speaker (Dawn Primarolo)
Order. We are supposed to be discussing amendments that have come from the House of Lords and deal with commercial relationships, the interaction between various bodies and the issue of an employee share scheme. I would be grateful—no, I insist that Members stick to the amendments before us on these important issues.
Jack Dromey
In that case, I must regretfully resist the temptation to respond to the hon. Member for Solihull (Lorely Burt), much as I should like to do so.
Let me make a point that goes to the heart of what you have just said, Madam Deputy Speaker. We have been given few assurances about the method by which Royal Mail may be sold in a way that guarantees value for money for the taxpayer, and we have no idea who its new owner might be. We have no assurance that employee shares will be held in trust and could not simply be sold on in a short period, which would defeat the objective of employee involvement. We do not know for sure that access pricing for Royal Mail competitors will be fair. An IBA should have been included in the Bill, on a continuing basis. What will happen to the post office network after 2015, when the comprehensive spending review money runs out but the Bill’s provisions do not, and when, sadly, we then embark on the path towards privatisation of Royal Mail?
Let me return to the two constituency stories that I related earlier. Few jobs in Britain have been immortalised in children’s books, but Postman Pat reflects the high regard that exists for the postmen and postwomen in Birmingham and Britain, and they feel badly let down by the Bill. Will the Minister accept my invitation to visit Perry Common and meet Tarnjhit Dhesi, members of the Witton Lodge community association, and representatives of local care homes and tenants’ organisations? Will he sit down and listen to the case that they have put for the reopening of their post office in a small high street that some entrepreneurs are trying to regenerate, at the heart of which is an admirable man who wants to provide a service for the community?
That man said this to me: “Jack, I don’t understand why I read all these stories about the commitment to the post office network. The post office here closed a couple of years ago. We want to reopen, but the door has been shut in our faces.” Will the Minister translate his commitment to local post offices into action by coming to hear the voice of local people who want a local post office?
Damian Collins (Folkestone and Hythe) (Con)
Following the speech by the hon. Member for Birmingham, Erdington (Jack Dromey), I wish to raise a few points relating to the inter-business agreement and the post office network.
The network should be under some obligation to adapt itself to the framework established by the Government. The creation of the post office local format, which allows limited services to be provided through other retail businesses, is an example of that at work. The location in his constituency that the hon. Gentleman cited may well be the type of location in which the post office can adapt its service to conform with the local retail environment and, in doing so, begin to thrive. I also agree with the Government that mutualisation should be partly a bottom-up process and not entirely driven from the top.
At the end of last year, I met in my constituency representatives of Action with Communities in Rural Kent. Unfortunately, the Bill had already completed its passage through the House of Commons. That organisation does excellent work, with some public support. When a post office closes—not as a result of any decision by the Government or a Minister, but because the person who owned the business has either passed on or retired—the organisation actively seeks a new location for it. In the village where I live, a post office moved from stand-alone premises to the local pub. The mutualisation for which the Bill provides can support such work, and should be welcomed.
The Post Office’s own initiatives in developing the post office local format can support the trend as well. As the hon. Gentleman pointed out, the Government’s financial guarantee will expire in 2015. The Post Office should be using the intervening period to establish how it can adapt its activity to ensure that its business platform is as sustainable as possible in the future.
The inter-business agreement is a two-way street. In terms of access for British consumers, the post office network is unrivalled by any other retail business. Its footprint is much larger than those of all the supermarket chains put together, and it is very unlikely that Royal Mail could find another commercial provider which could match that. The IBA provides the possibility of an interesting two-way negotiation between the Post Office and Royal Mail. To what extent would Royal Mail like the Post Office to offer mail services from competing companies when it is given the freedom to do so? There is also the possibility that Royal Mail could establish a better relationship with the post office network. The Bill provides the opportunity for a more equal relationship than that which, at present, is skewed in Royal Mail’s favour.
There is much to be welcomed in the Bill from a business point of view. The Post Office should see it as an opportunity to embrace mutualisation and a different type of relationship with Royal Mail which will enable it to provide a better service for its customers.
Mr Davey
I agree that we should focus on the long-term viability of the post office network. I recently attended the annual conference of the National Federation of SubPostmasters in Torbay, where we discussed the sorts of thing we are proposing and they were able to look at the new machines that Post Office Ltd is developing to position itself to win Government contracts, such as the application, enrolment and identity machine, which is already being used for contracts from the Driver and Vehicle Licensing Agency. They already have a portable one, which could be used across the network, and a number of other machines. The sub-postmasters were absolutely delighted. I wish that Opposition Members who have spoken today had been there, because the sub-postmasters showed greater confidence in the future of their post offices and their businesses than they do.
I will respond to some of the comments made by other hon. Members who have spoken. I thank my hon. Friend the Member for Solihull (Lorely Burt) for her comments. She mentioned the benefits to employees that will result from the proposals on employee shares set out in the amendments, and she mentioned pensions, which we will come to later. She specifically asked what discussions we have had with the Communication Workers Union on some of the amendments. It is interesting that on 13 April the CWU issued a press release in which it said that it welcomed the amendments to the Bill. Its general secretary, Mr Billy Hayes, said:
“We warmly welcome these amendments…We are pleased that Government has taken on board some of our concerns”.
I have met the CWU, and it has noticed the progress that we have made.
The hon. Member for Birmingham, Erdington (Jack Dromey) complained that post offices in his constituency would close as a result of the amendments, but I hope that he tells his constituents that four post offices closed in his constituency under the previous Government. All Members across the House will have discussed post office closures with many people in many communities. What we are offering in these amendments and in the Bill is hope that the Post Office will not see a repeat of those closure programmes, which have devastated so many people.
The hon. Gentleman asked what would happen after the spending review. The modernisation that the Bill and the amendments will enable us to undertake with the £1.34 billion will allow us to go further and continue the transformation. I believe that what we have with the funding package and the proposals is a radical change, but one that will lead to a sustainable network. He knows, because I wrote to him on 9 February, that the post office in Perry Common closed under the previous Government. Reopening it would lead to business migrating away from nearby offices at College road and Hawthorn road, which could jeopardise all three offices, which I am sure is not what he wants.
Jack Dromey
The Minister speaks of hope, and the same word was used when the Bill was launched. Seven post offices in Birmingham now face closure, one of which is in the Yardley constituency of a Liberal Democrat Member. Will the Minister agree to meet the community of Perry Common, which has signed a 1,000-strong petition asking for the reopening of a flexible post office in their locality? Earlier this week another Minister went to Perry Common and held it up as an excellent example of a community that has rebuilt its environment. It now wants to rebuild its high street, and it wants a sub-post office on it. Will the Minister meet the community and Mr Tarnjhit Dhesi, who is driving that proposal?
Mr Davey
I say to the hon. Gentleman and his constituents that they should look at the economics of the post office network in the area, because there are other post offices nearby, and talk with Post Office Ltd about the “locals” model that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) mentioned.
The “locals” model holds real prospects for dealing with some of the post office network’s cost problems, and for helping to revive shops on our high streets by bringing them and post offices together. In our pilots, not only have postal operators liked the model that we are developing, but so have post office customers and local communities. Having seen the evidence, some communities that were sceptical have been delighted by the service quality that Post Office “locals” have delivered. That is the future, and my hon. Friend was quite right to turn to it.
Jack Dromey
I am sorry to press the point, but my local community has looked at the pilots, is inspired by the prospect of flexible provision and wants to engage, but it has had the door closed in its face. Ministers say that they are offering hope and are prepared to listen, so will the Minister meet a delegation from Perry Common and Mr Dhesi?